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

                                    FORM 10-K

(Mark One)

|_|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

For the fiscal year ended June 30, 2010

                                       OR

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

For the transition period from ____________________ to ____________________

                          Commission File Number 0-6620

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

              New York                                    16-0928561
              --------                                    ----------
   (State or other jurisdiction of                    (I.R.S. Employer
    incorporation or organization)                    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:
      Title of each class             Name of each exchange on which registered
      Common Stock, $0.01 par value   The NASDAQ Stock Market LLC
                                      (NASDAQ Global Market)

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes __ No X

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ___ No X

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___

Indicate by checkmark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of regulation S-T (Section
232.405 of this chapter)

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<PAGE>

during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). 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. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer __    Accelerated Filer X   Non-accelerated Filer __
Smaller reporting company __

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes __ No 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 December 31, 2009, as reported on the NASDAQ Global Market, was
approximately $208,438,798.

The number of shares of the Registrant's Common Stock outstanding on August 9,
2010 was 14,667,932.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement to be filed with the
Securities and Exchange Commission in connection with its 2010 Annual Meeting of
Shareholders are incorporated by reference into Part III of this Annual Report
on Form 10-K.

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<PAGE>

PART I
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Item 1.    Business
Item 1A.   Risk Factors
Item 1B.   Unresolved Staff Comments
Item 2.    Properties
Item 3.    Legal Proceedings
Item 4.    Reserved

PART II
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Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters
           and Issuer Purchases of Equity Securities
Item 6.    Selected Financial Data
Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
Item 8.    Financial Statements and Supplementary Data
Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure
Item 9A.   Controls and Procedures
Item 9B.   Other Information

PART III
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Item 10.   Directors, Executive Officers and Corporate Governance
Item 11.   Executive Compensation
Item 12.   Security Ownership of Certain Beneficial Owners and Management
           and Related Stockholder Matters
Item 13.   Certain Relationships and Related Transactions, and Director
           Independence
Item 14.   Principal Accountant Fees and Services

PART IV
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Item 15.   Exhibits and Financial Statement Schedules

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<PAGE>

                                     PART I

Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K for the fiscal year ended June 30, 2010 ("Annual
Report" or "Annual Report on Form 10-K"), including the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section, contains
"forward-looking statements" within the meaning of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 with respect to our
business, financial condition, results of operations and prospects. Words such
as "anticipates," "expects," "intends," "plans," "predicts," "believes,"
"seeks," "estimates," "could," "would," "will," "may," "can," "continue,"
"potential," "should," and the negative of these terms or other comparable
terminology often identify forward-looking statements. Statements in this Annual
Report on Form 10-K that are not historical facts are hereby identified as
"forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. These forward-looking statements are
not guarantees of future performance and are subject to risks and uncertainties
that could cause actual results to differ materially from the results
contemplated by the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes include without
limitation those discussed under the headings "Risk Factors" and "Qualitative
and Quantitative Disclosures About Market Risk" below, as well as those
discussed elsewhere in this Annual Report. You are urged not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this Annual Report. We undertake no obligation to revise or update any
forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this Annual Report. You are urged to carefully
review and consider the various disclosures made in this Annual Report, which
attempt to advise interested parties of the risks and factors that may affect
our business, financial condition, results of operations and prospects.

Anaren(R), Xinger(R), and What'll We Think Of Next(R) are registered trademarks
of Anaren, Inc. All rights reserved.

Item 1. Business

Unless the context otherwise requires, all references in this Annual Report on
Form 10-K to the "Company", "Anaren", "we", "our" and "us" refers to Anaren,
Inc., a New York corporation, incorporated in 1967. Our executive offices are
located at 6635 Kirkville Road, East Syracuse, New York 13057. Our telephone
number is (315) 432-8909.

Our common stock is listed on The NASDAQ Global Market under the symbol "ANEN."

We maintain a website at www.anaren.com. We make available, free of charge on
our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
and amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after we electronically file those reports with, or furnish them to,
the Securities and Exchange Commission, or the SEC. We are not including the
information contained at www.anaren.com, or at any other Internet address as
part of, or incorporating by reference into, this Annual Report on Form 10-K.

Anaren is a leading provider of microelectronics, and microwave components and
assemblies for the wireless and space and defense electronic markets. Our
distinctive engineering, manufacturing and packaging techniques enable us
cost-effectively produce compact, lightweight microwave products for use in
wireless communication and space and defense systems covering a broad range of
frequencies (from 100 MHz to more than 30 GHz) and power levels (small signal to
more than 500 watts).

Using our focused research and development efforts, we design components and
subsystems for wireless communication systems including wireless infrastructure,
wireless consumer and medical applications, as well as advanced radar,
beam-forming, jamming, motion control and receiver applications for the space
and defense markets.

We conduct our business in two business segments: o Wireless Group and o Space
and Defense Group.

The financial statements included in this Annual Report provide additional
information relating to these segments for each of the Company's last three
fiscal years. See "Note (16) Segment and Related Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
financial information about our operating segments, including net sales derived
from foreign sales.


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Wireless Group

Industry Overview

The Company's wireless products are used primarily in communication systems,
either in user equipment, such as Wireless Local Area Network (WLAN), Cellular
Handsets and Bluetooth devices, or Satellite Television Reception applications,
or on the network infrastructure side such as Cellular Telephone Base Stations
or Television Broadcast equipment applications.

A typical wireless communications network is comprised of 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 is comprised of the equipment that receives and transmits telephone
calls and data traffic 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, filters, and combiners - along with one or more
antenna to transmit and receive signals to and from the wireless user.

Global System for Mobile communications (GSM) and the higher data rate overlay
Enhanced Data Rates for GSM Evolution (EDGE) is the industry leading technology
in terms of equipment shipped, users served, and countries covered. In support
of major equipment roll-outs in non-developed countries primarily in India and
China, demand for GSM/EDGE equipment was at all time highs during fiscal 2009
and it started declining in fiscal 2010 as higher datarate systems shipments
increased significantly. This resulted in increased demand for the Company's
components and a decline in higher level custom assemblies.

GSM is referred to as a second generation (2G) wireless network. For higher data
rates, third generation networks (3G) are utilized and we will also soon see
deployment of fourth generation networks (4G). In the years to come, the number
of persons requiring high data rates to support using internet and email from
mobile terminals is also expected to continue to grow. Fueled by this demand,
deployment of new high data rate networks should continue. Demand for 3G related
products is estimated to be similar to 2G equipment in the very near future. The
Company's products are utilized in both 2G and 3G equipment, and will be used in
the 4G equipment.

Strategy

The Company's strategy for the Wireless Group is to continue to use its
microwave expertise, proprietary technologies, extensive microwave design
libraries and low cost manufacturing capabilities to further expand its
penetration in the wireless industry. Key components of the Company's strategy
include the following:

      Pursue Large Addressable Markets. The Company has successfully penetrated
      the mobile wireless infrastructure market and is using its market position
      to pursue other wireless markets such as Wireless Data Transmission,
      Mobile Handsets, Bluetooth, Satellite Television, medical and other
      consumer electronics markets. This is enabled by advances made in the
      Company's design and manufacturing of su- miniature Multi-Layer Stripline
      components.

      Focus on value added products. The Company continues to expand its
      component offerings to enable the Company to increase the number of
      products addressing each wireless application. In addition, with its
      Multi-Layer Stripline, ferrite devices, and Thick Film Ceramic
      manufacturing technologies, the Company will continue to increase the
      functionality of its products, thereby enabling its wireless customers to
      reduce the size and cost of their platforms.

      Strengthen and Expand Customer Relationships. Today, a limited number of
      large original equipment manufacturers (OEMs) drive the wireless market.
      The Company has developed, and plans to continue to expand, customer
      relationships with many of these manufacturers including Alcatel Lucent,
      Ericsson, Huawei, Motorola, Nokia Siemens Networks, ZTE and Samsung. The
      Company intends to further strengthen its customer relationships by
      offering complete outsourcing solutions, from research and development to
      product design and production, thereby increasing the customers' reliance
      on the Company.

      Pursue Price Leadership Position. The Company aspires to use its
      technological leadership, low cost manufacturing, and sourcing
      capabilities to be one of the lowest cost provider of components and
      higher level assemblies for the wireless markets.

      Pursue Strategic Acquisitions. The Company intends to continue to pursue
      opportunistic acquisitions of companies, product lines and technologies.
      The Company will focus on acquisitions that compliment its technical
      expertise and business development resources and provide a competitive
      advantage for its targeted markets.


Products and Technologies

The Company provides components and assemblies to leading OEMs in the wireless
industry. These products range from sub-miniature components for consumer
electronics to custom assemblies for high power wireless infrastructure
applications.


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The Company has developed its product offerings to enable its customers to
reduce the size and cost, while enhancing the performance of their equipment.
The Company continually invests capital and human resources to enhance existing
products and develop new products to address current and future 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:

      Passive Surface Mount Components. The Company's Xinger(R) line of products
      consists of off-the-shelf surface mount microwave components which provide
      passive microwave signal distribution functions. These products were
      developed to provide a low-cost high performance signal distribution
      component, which could be placed on standard printed circuit boards with
      automated production equipment. The primary applications of these products
      are in equipment for cellular base stations and in WLAN, Bluetooth, and
      Satellite Television.

      In cellular base stations, the Company's Xinger(R) surface mount products
      are utilized in radio frequency (RF) power amplifiers, and are also found
      in low-noise amplifiers and radios. Based on its research, the Company
      believes it is currently the market leader in this product area, supplying
      industry leading OEMs and leading power amplifier manufacturers. The
      Company continues to invest in the expansion of this product line as well
      as its addressable market. The Company's surface mount product line offers
      significantly improved RF performance and power handling in a package that
      supports the latest global environmentally friendly initiatives.

      The Company also has several products specifically designed to address
      WLAN, cellular telephone handsets and Bluetooth applications. These
      innovative products are 1/100th the size of our typical Xinger(R) type of
      products and offer performance and cost advantages over traditional
      consumer electronic components.

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

      Resistive Products. The Company's resistive product line includes
      resistors, power terminations, and attenuators for use in high power
      wireless, industrial, and medical applications. These products range from
      very small components for implantable medical devices to high power
      products used in power amplifiers. The Company's resistive products are
      frequently used in conjunction with ferrite products as well as our
      Xinger(R) surface mount components.

      Custom Splitting and Combining Products. In addition to its standard
      products, the Company offers a wide range of custom signal splitting and
      combining solutions. These custom solutions are typically used to
      distribute signals to and from antennas, radio transceivers and power
      amplifiers in wireless base station applications. The Company's custom
      assemblies typically integrate several of the Company's components such as
      Xinger(R), ferrite, and resistive products. Given this vertical
      integration, the Company's custom splitting and combining products offer
      very high performance and can be designed in unique configurations,
      allowing base station designers an opportunity to greatly reduce space,
      complexity and cost while enhancing performance.

      Custom Radio Frequency Backplane Assemblies. The Company's RF backplanes
      provide efficient connections of microwave signals between subsystems in
      wireless base stations. RF backplanes are conceptually 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 digital signal routing solutions.
      Our RF backplanes are typically used in conjunction with radio
      transceivers and RF power amplifiers. The Company also offers backplane
      assemblies with fully integrated radio-frequency signal switching
      capability.

      Hybrid Matrix Assemblies. The Company's hybrid matrix assemblies allow
      customers to effectively reduce the number of amplifiers in a base
      station. Base station amplifier systems are designed to handle peak usage
      when maximum calls are being 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. These products are offered in a number
      of packaging configurations, including backplanes.

Customers

The Company believes that the strength of its customer support and depth of its
customer relationships provide the Company a competitive advantage. To this end,
the Company endeavors to 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 dedicated multi-disciplined team


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including project engineering, design engineering and customer service to each
customer to ensure a high level of responsiveness and customer service. This
team assists the customer from the conceptual 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 sells its standard line of Xinger(R) components, custom products,
resistive components, and ferrite components to leading OEMs in the wireless
industry and to a broad range of other wireless equipment contract manufacturers
in the industry. In general, customers have purchased the Company's products
directly from the Company or through distributors or sales representatives.
During the fiscal year ending June 30, 2010, the Wireless Group accounted for
approximately 33% of the Company's total revenues. No Wireless Group customer
accounted for more than 10% of the Company's fiscal 2010 net sales. The
following is a list of customers who generated $1 million or more in net sales
for the Company in the fiscal year ended June 30, 2010:

      o     Avnet Electronics

      o     EG Components

      o     Huawei Technologies Co., Ltd.

      o     Motorola, Inc.

      o     Nokia Siemens Networks

      o     Richardson Electronics, Ltd.

      o     Solectron Tech

      o     Sanmina

      o     St. Jude Medical

      o     MKS/ENI

      o     Evercom International

      o     Symbol Technologies

Competition

The microwave component and assembly industry continues to be highly
competitive. Direct competitors of the Company in the wireless market include
Aeroflex, Smith Industries, SDP, and Soshin Electric Co. As a direct supplier to
OEMs, the Company also faces significant competition from the in-house
capabilities of its customers. However, the current trend in the wireless
marketplace has been for the OEMs to outsource more of their design and
production work.

The principal competitive factors in both the foreign and domestic markets are
technical performance, reliability, ability to produce in volume, on-time
delivery and most critically, price. It is anticipated that this pricing
pressure will continue indefinitely. Based on these factors, the Company
believes that it competes favorably within its markets in the wireless industry.
The Company believes that it is particularly strong in the area of technical
performance in the wireless marketplace. With its manufacturing capability in
Suzhou, China, and innovative design techniques, the Company believes that it
also competes favorably on price as well.

Backlog

The Company's backlog of orders for the Wireless Group was $10.5 million as of
June 30, 2010, versus $8.0 million as of June 30, 2009. Backlog for the Wireless
Group, primarily represents firm orders for component products and signed
purchase orders (i.e. orders for specific custom sub-assemblies) for custom
components due to ship within eight to twelve weeks. The Company does not
believe that its wireless backlog as of any particular date is representative of
actual sales for any succeeding period. Typically, large OEMs including
Ericsson, Motorola, and Nokia, who use the Company's component and custom
products, negotiate set prices for


                                       4
<PAGE>

estimated annual volumes. The Company then receives a firm delivery commitment
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 its facilities 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 orders with some financial penalty or defer orders
without significant penalty.

Space & Defense Group

Industry Overview

The US Department of Defense (DOD) and major US Defense OEMs are committed to
ensuring a high state of military readiness. The DOD funding priorities focus on
the safety and effectiveness of US troops, national defense, homeland security,
and battlefield command and communication systems. Advanced radar systems,
jamming systems, smart munitions, electronic surveillance and communication
systems are important DOD capabilities. The Company's products and technologies
are well positioned to support these critical DOD systems.

Strategy

The Company's strategy for the Space & Defense Group is continued use of its
microwave expertise, proprietary design libraries, technologies, and
manufacturing capabilities to continually expand its customer penetration. Key
components of the Company's strategy include the following:

      Strengthen and Expand Strategic Customer Relationships. Today, a limited
      number of large OEMs drive the Space & Defense Group's business. The
      Company has developed, and plans to continue to expand customer
      relationships with many of these OEMs including, Raytheon, Lockheed
      Martin, Northrop Grumman, ITT, Harris, Rockwell and Boeing. The Company
      intends to further strengthen its customer relationships by offering
      complete solutions, from research and development to product design and
      manufacturing.

      Focus on value added products. The Company will continue to expand its
      product and technology offerings to increase the added value for next
      generation space and defense systems. The Company will continue leveraging
      investments in advanced microwave packaging technologies to meet the
      demands of our customers for increased levels of integration and
      functionality.

      Pursue Strategic Acquisitions. The Company will continue to pursue
      opportunistic acquisitions of companies (similar to M. S. Kennedy Corp.
      (MSK) and Unicircuit, Inc. (Unicircuit) which were purchased in fiscal
      2009), product lines and technologies that provide synergistic
      opportunities for its Space & Defense Group. The Company will focus on
      acquisitions that compliment its technical expertise and business
      development resources and provide a competitive advantage for its targeted
      markets.

Products and Technology

Our Space & Defense Group principally designs and manufactures advanced
microwave-based hardware for use in advanced radar systems, advanced jamming
systems, smart munitions, electronic surveillance systems and satellite and
ground based communication systems.

      Radar Countermeasure Subsystems. Defense radar countermeasure subsystems
      digitally measure, locate and counter enemy radar systems. Our Digital
      Radio Frequency Measurement (DRFM) devices are used for storing and
      retrieving RF signals as part of military aircraft self protection
      systems. Our Digital Frequency Discriminators (DFD) are employed in
      electronic warfare (EW) systems to detect and measure the RF signals
      emitted by enemy radar systems. We also manufacture a suite of electronic
      subassemblies designed to process radar signals detected by a receiver.
      This technology is a major component of Electronic Support Measure (ESM)
      systems used on helicopters and fixed winged aircraft to detect, locate,
      and identify enemy radar. This technology is called a Passive Ranging
      Subsystem.

      Beamformers. Beamformers determine the number, size and quality of beams
      that are produced from an antenna array. The Company supplies passive and
      active beamformers and has a unique expertise in designing and
      manufacturing high performance beamformers in industry leading small size
      packages. Passive beamformers produce fixed beam locations while active
      beamformers allow for real-time reconfiguration of the beam pattern.
      Beamforming technology is implemented on military and commercial phased
      array communication systems and radar systems.


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<PAGE>

      Switch Matrices. Switch matrices route RF signals from a single location
      to one or multiple end user locations. These products allow system
      operators to allocate capacity as required.

      Radar Feed Networks. Radar feed networks distribute RF energy to the
      antenna elements of the radar. Radar Feed Networks are integrated into
      radar platforms for airborne, ship borne, ground base radars and missile
      guidance applications.

      Analog Hybrid Modules. Analog Hybrid Modules are used in the electronic
      control and power supply systems for commercial and military aircraft,
      satellites, communication systems and sensor platforms. Analog components
      are used to accurately control the movement of flight surfaces on aircraft
      and missiles, steer antennas for communication systems and provide highly
      accurate regulated voltages for on board power systems. The product
      portfolio consists of motor controllers, amplifiers, and power supply
      components.

      Mixed Signal Printed Circuit Boards. Mixed signal printed circuit boards
      are essential to the operation of all commercial and military aircraft,
      satellite systems, communication systems and sensor platforms. Mixed
      signal printed circuits route RF, analog, digital and power signals to
      mission critical components and systems.

Customers

The Company currently sells passive components and electronic subsystems to
prime contractors serving the United States and foreign governments. During the
fiscal year ending June 30, 2010, the Space & Defense Group accounted for
approximately 67% of the Company's revenues. Lockheed Martin accounted for 14.0%
and Raytheon Company accounted for 13.6% of the Company's net sales. No other
customer in the Space & Defense Group accounted for more than 10% of the
Company's fiscal 2010 net sales. The following is a list of Space & Defense
customers who generated $1 million or more in revenues in the fiscal year ending
June 30, 2010:

      o     ITT Corporation

      o     Lockheed Martin Corporation

      o     The Boeing Company

      o     Northrop Grumman Corporation

      o     Raytheon Company

      o     Thales Alenia Space France

      o     Rockwell Collins, Inc.

      o     Analog Modules, Inc.

      o     L3 Communications Holdings, Inc.

      o     Richardson Electronics, Ltd.

      o     Wellking Electronics

      o     SRC Tec Inc.

      o     MCL Industries, Inc.

      o     Sendec Corporation

      o     General Dynamics Corporation

Competition

As a direct supplier to large defense contractors, the Company faces significant
competition from the in-house capabilities of its customers. In some cases, we
are approached to supply a solution in parallel with an internal effort as a
form of risk mitigation.


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<PAGE>

Direct competitors of the Company in the space and defense market include EMS
Technologies, Cobham, Inc., Herley Industries, KOR Electronics, Smith
Industries, TTM Technologies, International Rectifier, Aeroflex and Merrimac
Industries.

Backlog

Order backlog for the Space & Defense Group was $89.6 million as of June 30,
2010, versus $87.0 million as of June 30, 2009. All of the orders included in
the Space & 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 an indicator of actual sales for any succeeding period.

Company Operations

Sales and Marketing

The Company markets its products worldwide to OEMs and other industry
participants in the wireless and space and defense markets primarily through a
sales and marketing force of 44 people as of June 30, 2010. The Company has
regional sales offices located in Sacramento, California; Waterlooville,
England; and Suzhou and Shenzen, China. In addition, as of June 30, 2010, the
Company had contracts with 3 major distributors, with 15 manufacturers'
representatives in the United States and Canada, and with 10 international
representatives located in Western Europe, the Middle East and Asia. As part of
its marketing efforts, the Company advertises in major trade publications and
attends major industry shows. 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 catalog components in
a format that 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 with manufacturers'
representatives. To promote widespread acceptance of the Company's products and
provide customers with support for their technical and commercial needs, the
Company's sales and engineering teams work closely with the customers to develop
solutions tailored for their particular requirements. The Company believes that
its engineering team, comprised of 217 design and engineering professionals as
of June 30, 2010, provides the Company with a key competitive advantage.

The Company uses distributors for its standard products, most notably its
Xinger(R) surface mount components. Richardson Electronics is a worldwide
distributor of Anaren products. Avnet distributes components in North America
and Asia, meanwhile, BFI Optilus distributes the Company's products in Europe.
The Scandinavian countries are serviced by E.G. Components, Inc., a subsidiary
of Elektronikgruppen. Using independent distributors to market and sell its
products has become an important part of the Company's sales efforts by
providing the Company with a larger sales force to promote its catalog product
offerings.

Employees

As of June 30, 2010, the Company employed 1,011 full-time people, including 49
temporary employees. Of these employees, 217 were members of the engineering
staff, 684 were in manufacturing positions, 44 were in sales and marketing
positions, and 66 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.

Manufacturing

The Company currently maintains manufacturing locations in East Syracuse, New
York; Salem, New Hampshire; Liverpool, New York; Littleton, Colorado and Suzhou,
China. During fiscal 2009, the Company acquired MS Kennedy which currently
occupies a 43,000 square foot facility in Liverpool, New York, and Unicircuit in
Littleton, Colorado, which owns 30,500 square feet and leases 18,000 square feet
of manufacturing space. The Company's China operation currently leases a 76,000
square foot facility in Suzhou, China, which is expected to be taken over by the
Chinese government to make room for a new high-speed railway station and
surrounding commercial district. The Company's landlord was granted a new parcel
of land near the current site on which to construct a new facility. To insure
continuity of operations, the Company entered into a new lease agreement with
the landlord in February 2010 to move the Company's Suzhou operations into a new
107,000 square foot facility to be built on the granted property. The move to
the new facility is expected to take place in the third or fourth quarter of
fiscal year 2011. The 156,000 square foot, East Syracuse facility house the
company's legacy Wireless Group and Space & Defense Group's manufacturing and
engineering areas to support current and future growth. The Company's 65,000
square foot facility located in Salem, New Hampshire, houses its wholly owned
subsidiary, Anaren Ceramics, Inc. This facility includes significantly more
space for future expansion and a state-of-the-art Class 10,000 clean room for
manufacturing.


                                       7
<PAGE>

The Company continues to develop capability and capacity to produce highly
engineered, complex microwave subassemblies to support its Space & Defense
business. In fiscal 2007, the Company invested in state-of-the-art Low
Temperature Co-fired Ceramic (LTCC) equipment for its Salem, New Hampshire
facility. This technology supports the manufacture of multi-layer ceramic
circuits which perform well at RF and Microwave frequencies and provides the
high level of integration required in today's advanced military electronic
systems. The fiscal 2009 acquisition of MSK added high-reliability hybrid module
manufacturing to the Company's manufacturing capabilities. This capability will
be leveraged with the Company's existing RF design expertise to provide highly
integrated multi-function RF and microwave modules to the major space and
defense OEMs. The addition of Unicircuit provides the Company with state-of-the
art RF and Microwave printed circuit board capability supporting design to print
manufacturing for direct OEM business as well as design to specification
capability when combined with the Company's existing RF design expertise.

The Company is committed to providing the lowest cost manufacturing solutions.
Part of this strategy has evolved with the continued investment in its Suzhou,
China operation. Most high volume, labor intensive wireless product lines from
the Syracuse and the Salem operations have been successfully transitioned to
Suzhou over the past three years. The Company has also successfully implemented
a material sourcing function in Suzhou, facilitating the identification,
qualification, and procurement of lower cost raw materials to support the
wireless infrastructure products being manufactured in Suzhou.

All of the Company's operational manufacturing facilities (East Syracuse, New
York; Salem, New Hampshire; Liverpool, New York; Littleton, Colorado; and
Suzhou, China) are ISO 9001 certified.

The Company manufactures its products from standard components, as well as from
items which are manufactured by vendors to its specifications. The raw materials
utilized in the Company's 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 2010, the Company had no
single vendor from which it purchased more than 10% of its total raw materials,
and the Company believes that alternate sources of supply are generally
available for all raw materials supplied by all Company vendors.

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's current development efforts include:

      o     products for use in mobile and fixed wireless infrastructure
            applications;

      o     low power transceiver products for wireless data transmission;

      o     advanced manufacturing technologies to produce high density
            microwave structures for next generation military radars,
            communication and sensor systems;

      o     advanced low temperature co-fired ceramic to produce light weight,
            highly integrated microwave integrated substrates for advanced
            military applications;

      o     miniature components for wireless networking, subscriber and
            broadcast applications; and

      o     high performance analog microelectronics including custom hybrids,
            power hybrids, and multi-chip modules.

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 $14.8 million in fiscal 2010, $13.0 million in fiscal 2009
and $10.4 million in fiscal 2008. Research and development costs are charged to
expense as incurred.

Intellectual Property

The Company's success depends to a significant degree upon the preservation and
protection of its proprietary product and manufacturing process designs and
other proprietary technology. To protect its proprietary technology and
processes, the Company generally limits access to its processes and technology,
treats portions of such processes and technology as trade secrets, and obtains
confidentiality or non-disclosure agreements from persons with access to such
proprietary processes and technology. The Company enters into agreements with
its employees prohibiting 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


                                       8
<PAGE>

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 currently has 16 active patents and 6 other patent applications that
are currently pending before the United States Patent and Trademark Office to
protect both the construction and design of its products. The Company also has
registered trademarks covering certain products; most notably is the Wireless
Group's Xinger(R) product family.

By agreement, Company employees who initiate or contribute to a patentable
design or process are obligated to assign their interest in any patent or
potential patent to the Company.

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 foreign 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 contract
regulations by various governmental agencies. The Company is also 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 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.

Item 1A. Risk Factors

In an effort to provide investors a balanced view of our current condition and
future growth opportunities, this Annual Report on Form 10-K includes comments
by our management about future performance. These statements which are not
historical information, are "forward-looking statements" pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These, and other forward-looking statements, are subject to business and
economic risks and uncertainties that could cause actual results to differ
materially from those discussed. The risks and uncertainties described below are
not the only risks and uncertainties that we face. Additional risks and
uncertainties not presently known to us or that are currently deemed immaterial
may also impair our business operations. If any of the following risks actually
occur, our business could be adversely affected, and the trading price of our
common stock could decline, and you may lose all or part of your investment. You
are encouraged to review our 2010 Annual Report, this Form 10-K for the fiscal
year ended June 30, 2010 and exhibits hereto filed with the Securities and
Exchange Commission, to learn more about the various risks and uncertainties
facing our business and their potential impact on our revenue, earnings and
stock price. Unless required by law, we disclaim any obligation to update or
revise any forward-looking statement.

We depend on a small number of suppliers for many of our component parts and
services.

In some cases we rely on a limited group of suppliers to provide us with
services and materials necessary for the manufacture of our products. Our
reliance on a limited group of suppliers involves several risks, including
potential inability to timely obtain critical materials or services; potential
increase in raw materials costs or production costs; potential delays in
delivery of raw materials or finished products; and reduced control over
reliability and quality of components or assemblies, as outsourcing continues.
We do not have binding contractual commitments or other controls over our
suppliers, and therefore cannot always rely upon the guaranteed availability of
the materials necessary for the manufacture of our products. If we are required
to seek alternative contract manufacturers or suppliers because we are unable to
obtain timely deliveries of acceptable quality from existing manufacturers or
suppliers, we could be forced to delay delivery of our products to our
customers. In addition, if our suppliers and contract manufacturers increase
their prices, we could suffer losses because we may be unable to recover these
cost increases under fixed price production commitments to our customers.

Capital expenditures by wireless service providers for infrastructure equipment
are volatile.

Demand for the Company's Wireless infrastructure equipment products continues to
fluctuate and visibility remains relatively unpredictable. Despite this
fluctuation and poor visibility, sales across the Company's standard component
and consumer component product lines were strong throughout fiscal year 2010.
Demand has fallen significantly in fiscal 2010, however, for wireless products,
especially from Nokia/Siemens networks ("Nokia) and is expected to continue at
substantially lower levels. Future decreases in capital expenditures for
Wireless infrastructure equipment could significantly adversely impact the
success of the Company's Wireless business.

The Company's results may be negatively affected by changing interest rates.

The Company is subject to market risk from exposure to changes in interest rates
based on the Company's financing activities. The Company's $50.0 million dollar
demand note agreement with Key Bank National Association (Keybank), which
provided the financing for the MSK and Unicircuit acquisitions bears interest at
the Company's choice at LIBOR, plus 100 to 450 bases points, or at Key Bank's
prime rate, minus 100 to plus 225 bases points, depending upon the Company's
EBITDA performance at the end of each quarter as measured by a defined formula.
Therefore, a ten percent change in the LIBOR interest rate at September 30, 2010


                                       9
<PAGE>

would have the effect of increasing or decreasing interest expense by
approximately $0.1 million annually. The Company's current outstanding balance
on the demand note stands at $40.0 million.

Changes in funding for defense procurement programs could adversely affect our
ability to grow or maintain our revenues and profitability.

The demand for many of our Space & Defense products has been favorably impacted
by an upward trend in defense spending in the last few years for, among other
things, advanced radar systems, advanced jamming systems, smart munitions,
electronic surveillance systems and satellite and ground based communication
systems. Although the ultimate size of future defense budgets remains uncertain,
current indications are that the total defense budget may decline over the next
few years. The specific programs in which we participate, or in which we may
seek to participate in the future, must compete with other programs for
consideration during the budget formulation and appropriation processes. While
we believe that our products are a high priority for national defense, there
remains the possibility that one or more of the programs we serve will be
reduced, extended or terminated. Reductions in these existing programs, unless
offset by other programs and opportunities, could adversely affect our ability
to grow our revenues and profitability.

We face continuing pressure to reduce the average selling price of our Wireless
products.

Many of our wireless customers are under continuous pressure to reduce costs
and, therefore, we expect to continue to experience pressure from these
customers to reduce the prices of the products that we sell to them. Our
customers frequently negotiate volume supply arrangements well in advance of
delivery dates, requiring us to commit to price reductions before we can
determine whether the assumed cost reductions or the negotiated supply volumes
can be achieved. To offset declining average sales prices, we believe that we
must achieve manufacturing cost reductions and increase our sales volumes. If we
are unable to offset declining average selling prices, our gross margins will
decline, and this decline could materially harm our business, financial
condition and operating results. During fiscal year 2010 this pricing pressure
intensified, particularly affecting our ferrite and resistor product lines.

We depend on the future development of the wireless and satellite communications
markets, which is difficult to predict.

We believe that our future growth depends in part on the success of the wireless
and satellite communications markets. A number of the markets for our products
in the wireless and satellite communications area have only recently begun to
develop. It is difficult to predict the rate at which these markets will grow,
if at all. Existing or potential wireless and satellite communications
applications for our products may fail to develop or may erode. If the markets
for our products in wireless and satellite communications fail to grow, or grow
more slowly than anticipated, our business, financial condition and operating
results could be harmed.

The markets which we serve are very competitive, and if we do not compete
effectively in our markets, we will lose sales and have lower margins.

The markets for our products are extremely competitive and are characterized by
rapid technological change, new product development and evolving industry
standards. In addition, price competition is intense and significant price
erosion generally occurs over the life of a product. We face competition from
component manufacturers which have integration capabilities, as well as from the
internal capabilities of large communications original equipment manufacturers
and defense prime contractors. Our future success will depend in part upon the
extent to which these parties elect to purchase from outside sources rather than
manufacture their own microwave components. Many of our current and potential
competitors have substantially greater financial, technical, marketing,
distribution and other resources than us, and have greater name recognition and
market acceptance of their products and technologies. Our competitors may
develop new technologies or products that may offer superior price or
performance features, and new products or technologies may render our customers'
products obsolete.

If we are unable to meet the rapid technological changes in the wireless and
satellite communications markets, our existing products could become obsolete.

The markets in which we compete are characterized by rapidly changing
technologies, evolving industry standards and frequent improvements in products
and services. If technologies supported by our products become obsolete or fail
to gain widespread acceptance, as a result of a change in the industry standards
or otherwise, our business could be harmed. Our future success will depend in
part on factors including our ability to enhance the functionality of our
existing products in a timely and cost-effective manner; our ability to
establish close working relationships with major customers for the design of
their new wireless transmission systems that incorporate our products; our
ability to identify, develop and achieve market acceptance of new products that
address new technologies and meet customer needs in wireless communications
markets; our ability to continue to apply our expertise and technologies to
existing and emerging wireless and satellite communications markets; and our
ability to achieve acceptable product costs on new products.

We must also continue to make significant investments in research and
development efforts in order to develop necessary product enhancements, new
designs and technologies. We may not be able to obtain a sufficient number of
engineers, or other technical support staff, or the funds necessary to support
our research and development efforts when needed. In addition, our research and
development efforts may not be successful, and our new products may not achieve
market acceptance. Wireless and satellite


                                       10
<PAGE>

technologies are complex and new products and enhancements developed by our
customers can in turn require long development periods for our new products or
for enhancement or adaptation of our existing products. If we are unable to
develop and introduce new products or enhancements in a timely manner in
response to changing market conditions or customer requirements, or if our new
products do not achieve market acceptance, our business, financial condition and
operating results could suffer.

We rely on a limited number of original equipment manufacturers as customers and
the loss of one or more of them could harm our business.

We depend upon a small number of customers for a majority of our revenues.
During fiscal 2010, we had one customer that accounted for more than 10% of our
net sales (Lockheed Martin Corporation and Raytheon Company, who represented
14.0% and 13.6% of net sales, respectively). We anticipate that we will continue
to sell products to a relatively small group of customers. Delays in
manufacturing or supply procurement or other factors, including consolidation of
customers, could potentially cause cancellation, reduction or delay in orders by
a significant customer or in shipments to a significant customer. Our future
success depends significantly on the decision of our current customers to
continue to purchase products from us, as well as the decision of prospective
customers to develop and market space and defense and wireless communications
systems that incorporate our products.

We must continue to attract and retain qualified engineers and other key
employees to grow our business.

Our continued success depends on our ability to continue to attract and retain
qualified engineers, particularly microwave engineers, and management personnel.
Attracting and retaining qualified engineers, including microwave engineers,
particularly in Upstate New York, is very challenging. If we are unable to
successfully hire, train and retain qualified engineers and experienced
management personnel, it could jeopardize our ability to develop new products
for the wireless and space and defense markets, and could also negatively impact
our ability to grow our business.

Failure to meet market expectations could impact our stock price.

The market price for our common stock is based, in part, on market expectations
for our sales growth, margin improvement, earnings per share and cash flow.
Failure to meet these expectations could cause the market price of our stock to
decline, potentially rapidly and sharply.

The Company's Wireless business significantly depends upon its China operations

To compete globally against low cost manufacturers who primarily operate in the
Asia Pacific rim the Company has established an assembly and test facility in
Suzhou, China and also maintains a sales and marketing group based in Suzhou.
Conducting operations in China could be impacted by the political environment
within China and trade relations between the U.S. and Chinese governments. To
the extent products manufactured in Suzhou, China are sold outside of China the
Company may be impacted by currency fluctuations and therefore to the extent the
U.S. dollar weakens significantly against Chinese currency, the Company's
results of operations could be adversely affected.

The location of the Company's Suzhou, China facility is in an economic
development area which is currently being impacted by expansion of China's mass
transit system. As a result, the Company is scheduled to relocate the Suzhou
facility to a new facility in the Suzhou Office Park sometime during the first
or second quarter of fiscal year 2011. The Company's ability to successfully
transition operations to the new facility may adversely impact sales and
profitability of the Company's Wireless Group.

The Company could experience an impairment of goodwill or tradenames.

As the result of the two acquisitions completed in fiscal year 2009, and
acquisitions made in previous years, goodwill and other intangibles incurred as
a percentage of the Company's total assets increased. At June 30, 2010, the
total assets of the Company were $241.3 million, which included $45.4 million of
goodwill and tradenames. The goodwill arose from the excess of the purchase
price of each acquisition over the fair value of the net assets of the business
acquired. The tradenames were valued separately from goodwill at the amount
which an independent third party would be willing to pay for use of the MSK and
Unicircuit names. The Company performs annual evaluations for potential
impairment of the carrying value of goodwill and tradenames in accordance with
the business combination accounting rules. To date, these evaluations have not
resulted in the need to recognize an impairment charge. However, if the
Company's financial performance were to decline significantly, especially in the
Company's Wireless Group, the Company could incur a non-cash charge in its
income statement for the impairment of goodwill or tradenames.

We have been unable to procure a new tenant for our U.K. leased facility.

We currently lease a 20,000 square foot building in Frimley, England which is
currently not used in its operations. Annual cost of this facility is
approximately $0.6 million and the Company is currently attempting to sublet the
building. The existing lease term on this building expires in February 2014 and
the Company has not yet secured a new tenant. There is no assurance that the
Company will be able to secure a tenant(s) to take occupancy of the building or
continuously sublet the building during the remaining lease term.


                                       11
<PAGE>

Other Risks

In addition to the risks identified above, other risks we face include, but are
not limited to, the following:

      o     the effect of significant changes in monetary and fiscal policies in
            the U.S. and abroad, including significant income tax changes,
            currency fluctuations and unforeseen inflationary pressures,
            unforeseen intergovernmental conflicts or actions, including but not
            limited to military conflict and trade wars;

      o     potential inability to timely ramp up to meet some of our customers'
            increased demands;

      o     order cancellations or extended postponements;

      o     unanticipated delays and/or difficulties increasing procurement of
            raw materials in Asia through our Suzhou, China facility;

      o     technological shifts away from our technologies and core
            competencies;

      o     unanticipated impairments of assets including investment values and
            goodwill; and

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

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The principal real estate of the Company is a 159,000 square foot building,
which the Company owns, located on a 30-acre parcel in East Syracuse, New York.
The Company's wholly owned subsidiary, Anaren Microwave, Inc., utilizes this
facility which houses a substantial portion of the Company's marketing,
manufacturing, administrative, research and development, systems design and
engineering activities.

Anaren Ceramics, Inc., a wholly owned subsidiary of the Company, operates in a
65,000 square foot building, which is owned by the Company's Anaren Properties,
LLC subsidiary, situated on approximately 12 acres in Salem, New Hampshire.

MSK, a wholly owned subsidiary of the Company, operates in a 43,000 square foot
building which it owns, situated on approximately 5 acres in Liverpool, New
York.

Unicircuit, a wholly owned subsidiary of the Company, operates in a 31,000
square foot building which it owns, situated on 3 acres in Littleton, Colorado.
Additionally, Unicircuit leases 18,000 square feet in an adjacent facility which
houses administrative offices and additional manufacturing space at an annual
cost of $0.2 million, with a lease term through November 2011.

Anaren Communications Suzhou Co. Ltd., the Company's wholly owned subsidiary
currently leases a 76,000 square foot facility in Suzhou, China, which houses
light manufacturing and assembly activities. This facility has an annual rent of
approximately $0.2 million. This facility is expected to be taken over by the
Chinese government to make room for a new high-speed railway station and
surrounding commercial district. The Company's landlord is currently building a
new facility near the current site. To insure continuity of operations, the
subsidiary entered into a new lease agreement with the landlord in February 2010
to move the Company's Suzhou operations into a new 107,000 square foot facility.
The move to the new facility is expected to take place in the third or fourth
quarter of fiscal year 2011 with an annual rent of approximately $0.3 million
and an initial lease term of 5-years, which is renewable for two additional
5-year terms at the Company's option.

The Company leases a 20,000 square foot building in Frimley, England which is
currently not used in its operations. Annual cost of this facility is
approximately $0.6 million and the Company is currently attempting to sublet the
building. The existing lease term on this building expires in February 2014 and
the Company has not yet secured a new tenant. There is no assurance that the
Company will be able to secure a tenant(s) to take occupancy of the building or
continuously sublet the building during the remaining lease term.


                                       12
<PAGE>

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

Item 3. Legal Proceedings

There are no material legal proceedings pending against the Company.

Item 4. Reserved

Executive Officers of the Company

Executive officers of Anaren, Inc., their respective ages as of June 30, 2010,
and their positions held with the Company are as follows:

NAME                  AGE    OFFICE OR POSITION HELD
----                  ---    -----------------------
Lawrence A. Sala      47     President, Chief Executive Officer, Chairman and
                             Director
Carl W. Gerst, Jr     73     Chief Technical Officer, Vice Chairman and Director

Gert R. Thygesen      55     Senior Vice President, Technology
George A. Blanton     49     Senior Vice President, Chief Financial Officer,
                             Treasurer
Mark P. Burdick       52     Senior Vice President and General Manager
Timothy P. Ross       51     Senior Vice President, Business Development
Amy B. Tewksbury      46     Senior Vice President, Human Resources
David M. Ferrara      55     Secretary and General Counsel

Lawrence A. Sala joined the Company in 1984. He has served as President since
May 1995, as Chief Executive Officer since September 1997, and as Chairman of
the Board of Directors since November 2001. 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 served as Chief Technical Officer and Vice Chairman of
the Board since May 1995 and served as Treasurer from May 1992 to November 2001.
Mr. Gerst previously served as Executive Vice President of the Company from its
founding until May 1995, and has been a member of the Company's Board of
Directors since its founding in 1967. 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 Senior Vice
President, Technology since November 2005 and served asVice President of
Technology from September 2000 until November 2005. He previously served as Vice
President, Operations from April 1995 to September 2000, and as Operations
Manager from 1992 until 1995. Mr. Thygesen holds a Bachelor of Science Degree
and a Master's Degree in Electrical Engineering from Aalborg University Center,
Denmark.

George A. Blanton joined the Company in 2008 as the Company's Senior Vice
President, Chief Financial Officer and Treasurer. Prior to his appointment, Mr.
Blanton served as the Assistant General Manager of Sonic Industries, a
subsidiary of Dover Corporation. From 1995 to 2006, Mr. Blanton served as the
Chief Financial Officer of Sargent, a subsidiary of Dover Corporation. Mr.
Blanton holds a Bachelor of Science Degree in Business Administration from
University of Southern California, and a Master's Degree in Business
Administration from Loyola Marymount University, Los Angeles, CA.

Mark P. Burdick has been with the Company since 1978 and has served as Senior
Vice President and General Manager since 2005 and as Vice President and General
Manager from September 2000 until November 2005. He served as Vice President and
General Manager, of the Company's Wireless Group from November 1999 until
September 2000, as Business Unit Manager -- Commercial


                                       13
<PAGE>

Products from 1994 to 1999, and as Group Manager of Defense Radar Countermeasure
Subsystems from 1991 to 1994. Mr. Burdick holds a Bachelor of Science Degree in
Electrical Engineering from the Rochester Institute of Technology, and a
Master's Degree of Business Administration from the University of Rochester.

Timothy P. Ross has been with the Company since 1982 and has served as Senior
Vice President, Business Development since November 2005 and as Vice President,
Business Development from September 2000 until November 2005. He served as Vice
President and General Manager, of the Company's Space & Defense Group, from
November 1999 until September 2000. Mr. Ross served as Business Unit Manager,
Satellite Communications 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
Degree in Business Administration from the University of Rochester.

Amy Tewksbury has served as Senior Vice President, Human Resources since
November 2005 and joined the Company in October 2002 as Vice President, Human
Resources. Prior to joining Anaren, Ms. Tewksbury was employed by Wegmans Food
Markets, Inc. for 16 years. She held various positions with Wegmans including
Human Resources Manager of the Syracuse Division, Corporate Human Resources
Project Manager, and Store Operations. Ms. Tewksbury holds a Bachelor of Science
Degree in Management from Syracuse University.

David M. Ferrara has served as the Company's Secretary and General Counsel since
February 1996, and became a part-time employee of the Company in January, 2008.
Mr. Ferrara is a member of the law firm Bond Schoeneck & King, PLLC, which
serves as legal counsel to the Company, and practices in the areas of labor and
employment and corporate law. Mr. Ferrara holds a Bachelor's Degree in Labor
Relations from LeMoyne College, a Master's Degree in Industrial Labor Relations
from Michigan State University and a Juris Doctor Degree from Indiana
University.

                                     PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
        Issuer Purchases of Equity Securities

The common stock of the Company is tradeded on the NASDAQ Global Market under
the symbol "ANEN." The following table sets forth the range of quarterly high
and low sales prices reported on the NASDAQ Global Market for the Company's
common stock for the fiscal quarters indicated. Sales prices listed represent
prices between dealers and do not include retail mark-ups, mark-downs or
commissions.

                  1st Quarter      2nd Quarter      3rd Quarter      4th Quarter

Fiscal 2009
 High                $11.76           $12.77           $13.30           $18.49
 Low                  $8.47           $07.80            $9.00           $10.53
Fiscal 2010
 High                $18.99           $17.26           $15.34           $15.99
 Low                 $15.08           $13.38           $11.15           $13.11

The  Company  had  approximately  428  holders of record of its common  stock at
August 9, 2010.

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.

Issuer Purchases of Equity Securities

On November 5, 2007, the Board of Directors increased by 2,000,000 the number of
shares of common stock that the Company was authorized to repurchase in open
market or privately negotiated transactions through its previously announced
stock repurchase program. The program, which may be suspended at any time
without notice, has no expiration date. There were on June 30, 2010,
approximately 516,000 shares remaining for purchase under the current
authorization.

                                       14
<PAGE>

Performance Graph

The following graph presents the cumulative total shareholder return for the
five years ending June 30, 2010 for our common stock, as compared to the NASDAQ
Composite Index and to the NASDAQ Electronic Components Index. The starting
value of each index and the investment in common stock was $100.00 on June 30,
2005.

[The following information was also depicted as a line chart in the printed
material]

                 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
                 Among Anaren, Inc., The NASDAQ Composite Index
                   And the NASDAQ Electronic Components Index

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                   6/05       6/06      6/07      6/08      6/09     6/10
-------------------------------------------------------------------------------------------
<S>                               <C>       <C>       <C>        <C>      <C>       <C>
Anaren, Inc.                      $100.00   $155.82   $133.92   $ 80.38   $134.45   $113.61
NASDAQ Composite                   100.00    107.08    130.99    114.02     90.79    105.54
NASDAQ Electronic Components       100.00     94.09    110.15    100.35     72.87     88.63
</TABLE>

*$100 invested on 6/30/05 in stock or index, including reinvestment of
dividends. Fiscal year ending June 30.

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 five year period
ended June 30, 2010, and with respect to the balance sheets at June 30, 2010 and
2009 are derived from the consolidated financial statements that have been
audited by Deloitte & Touche LLP (for statements of income for years ended June
30, 2010 and 2009 and balance sheets as of June 30, 2010 and 2009) and KPMG LLP
(for statements of income for the year ended June 30, 2008), independent
registered public accounting firms, which are included elsewhere in this Annual
Report on Form 10-K, and is qualified by reference to such consolidated
financial statements. All other Selected Financial Data set forth below is
derived from our audited consolidated financial statements not included in this
Annual Report on Form 10-K.


                                       15
<PAGE>

The following selected financial data should be read in conjunction with the
audited consolidated financial statements of the Company and the accompanying
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations included elsewhere in this Annual Report.

<TABLE>
<CAPTION>
                                                                     For the Years Ended
-----------------------------------------------------------------------------------------------------------
Statement of Income Data:                          June 30,    June 30,    June 30,    June 30,    June 30,
                                                     2010        2009         2008       2007       2006
-----------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                                <C>         <C>         <C>         <C>         <C>
Net Sales                                          $168,789    $166,905    $131,316    $128,987    $105,464
Cost of sales                                       106,512     112,289      90,838      83,125      67,494
                                                   --------    --------    --------    --------    --------
Gross Profit                                         62,277      54,616      40,478      45,862      37,970
                                                   --------    --------    --------    --------    --------
Operating expenses:
  Marketing                                           9,671       8,967       7,019       7,416       7,036
  Research and development                           14,782      12,986      10,410       9,134       8,748
  General and administrative                         19,040      18,636      13,592      12,298      10,345
  Restructuring                                          --          --         255          --          --
                                                   --------    --------    --------    --------    --------
  Total operating expenses                           43,493      40,589      31,276      28,848      26,129
                                                   --------    --------    --------    --------    --------
Operating income                                     18,784      14,027       9,202      17,014      11,841
                                                   --------    --------    --------    --------    --------
Other income (expense):
  Interest expense                                     (590)     (1,482)        (79)        (24)        (25)
  Other, primarily interest income                      368       1,088       2,322       3,571       2,453
                                                   --------    --------    --------    --------    --------
  Total other income (expense), net                    (222)       (394)      2,243       3,547       2,428
                                                   --------    --------    --------    --------    --------
  Income from continuing operations before           18,562      13,633      11,445      20,561      14,269
Income taxes                                          4,850       3,774       2,982       5,211       3,252
                                                   --------    --------    --------    --------    --------
Income from continuing operations                    13,712       9,859       8,463      15,350      11,017
Discontinued operations:
Income from discontinued
  operations of Anaren Europe                            --          --          --          --          82
Income tax benefit                                       --          --         770          --          --
                                                   --------    --------    --------    --------    --------
Net income from discontinued operations                  --          --         770          --          82
                                                   --------    --------    --------    --------    --------
Net income                                         $ 13,712    $  9,859    $  9,233    $ 15,350    $ 11,099
                                                   ========    ========    ========    ========    ========
Basic earnings per share:
  Income from continuing operations                $    .98    $    .71    $    .57    $    .89    $    .64
  Income from discontinued operations              $     --    $     --    $    .05    $     --    $    .01
                                                   --------    --------    --------    --------    --------
Net income                                         $    .98    $    .71    $    .62    $    .89    $    .65
                                                   ========    ========    ========    ========    ========
Diluted earnings per share:
Income from continuing operations                  $    .94    $    .70    $    .56    $    .87    $    .62
Income from discontinued operations                $     --    $     --    $    .05    $     --    $    .01
                                                   --------    --------    --------    --------    --------
Net income                                         $    .94    $    .70    $    .61    $    .87    $    .63
                                                   ========    ========    ========    ========    ========
Shares used in computing net Earnings per share:
  Basic                                              14,010      13,911      14,827      17,319      17,157
  Diluted                                            14,537      14,179      15,068      17,721      17,682
  Diluted
Balance Sheet Data:
Cash and cash equivalents                          $ 50,521    $ 49,893    $ 10,711    $  7,912    $ 15,733
Working capital                                      89,472     102,212      71,163      72,858     112,160
Total assets                                        241,348     237,055     172,103     191,204     189,026
Long-term debt, less current installments            30,000      40,000          --          --          --
Stockholders' equity                                172,926     160,945     150,864     166,794     172,118
</TABLE>


                                       16
<PAGE>

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.

Overview

The consolidated financial statements present the financial condition of the
Company as of June 30, 2010 and 2009, and the consolidated results of operations
and cash flows of the Company for the years ended June 30, 2010, 2009 and 2008.

The Company designs, develops and markets microwave components and assemblies
for the wireless communications, satellite communications and defense
electronics markets. The Company's distinctive manufacturing and packaging
techniques enable it to cost-effectively produce compact, lightweight microwave
products for use in base stations and subscriber equipment for wireless
communications as well as, in satellites and in defense electronics systems. The
Company is also a leading provider of high performance analog microelectronics
including custom hybrids, power hybrids, and multi-chip modules. The Company
sells its products to leading wireless communications equipment manufacturers
such as Ericsson, Motorola, Nokia Siemens Networks, Nortel Networks, and Huawei,
and to satellite communications and defense electronics companies such as Boeing
Satellite, ITT, Lockheed Martin, Northrop Grumman and Raytheon.

Results of Operations

Net sales from continuing operations for the year ended June 30, 2010 were
$168.8 million, up 1.1% from $166.9 million for fiscal 2009. Income from
continuing operations for fiscal 2010 was $13.7 million, or 8.1% of net sales,
up $3.8 million, or 39.1% from income from continuing operations of $9.9 million
in fiscal 2009.

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,
                                                   ----------------------------
                                                    2010       2009       2008
                                                   -----      -----      -----
Net sales                                          100.0%     100.0%     100.0%
Cost of sales                                       63.1       67.3       69.2
                                                   -----      -----      -----
Gross Profit                                        36.9       32.7       30.8
                                                   -----      -----      -----
Operating expenses:
  Marketing                                          5.7        5.4        5.3
  Research and development                           8.8        7.8        7.9
  General and administrative                        11.3       11.1       10.4
  Restructuring                                       --         --        0.2
                                                   -----      -----      -----
    Total operating expenses                        25.8       24.3       23.8
                                                   -----      -----      -----
Operating income                                     8.4        7.0       11.1
                                                   -----      -----      -----
Other income (expense):
  Interest expense                                  (0.3)      (0.9)      (0.1)
  Other, primarily interest income                   0.2        0.7        1.8
                                                   -----      -----      -----
    Total other income (expense)                    (0.1)      (0.2)       1.7
                                                   -----      -----      -----
Income from continuing operations
  before income taxes                               11.0        8.2        8.7
Income taxes                                         2.9        2.3        2.3
                                                   -----      -----      -----
Net income from continuing operations                8.1        5.9        6.4
Discontinued operations:
  Income from discontinued
    operations of Anaren Europe                       --         --         --
  Income tax benefit                                  --         --       (0.6)
                                                   -----      -----      -----
  Net income from discontinued operations             --         --        0.6
                                                   -----      -----      -----
  Net income                                         8.1%       5.9%       7.0%
                                                   =====      =====      =====


                                       17
<PAGE>

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

                                         Years Ended June 30,
                             2010                2009               2008
                        (In thousands)      (In thousands)      (In thousands)
                      ------------------   -----------------   -----------------
Wireless              $ 55,556     32.9%   $68,622     41.1%   $78,741     60.0%
Space & Defense        113,233     67.1%    98,283     58.9%    52,575     40.0%
                      --------    -----    -------    -----    -------    -----
                      $168,789    100.0%   $166,905   100.0%   $131,316   100.0%
                      ========    =====    =======    =====    =======    =====

Year Ended June 30, 2010 Compared to Year Ended June 30, 2009

Net sales. Net sales were $168.8 million for the year ended June 30, 2010,
compared to $166.9 million for fiscal 2009. Sales of Wireless Group products
fell $13.1 million, or 19.0%, and sales of Space & Defense Group products rose
$15.0 million, or 15.2%, in fiscal 2010 compared to fiscal 2009.

The decline in sales of Wireless Group products, which consist of standard
components, ferrite components and custom subassemblies for use in building
wireless base station and consumer equipment, was the result of a decline in
demand for both custom assemblies and standard component products during fiscal
2010 compared to fiscal 2009. Sales of custom products fell $8.9 million, while
sales of standard components fell $4.2 million in the current fiscal year
compared to fiscal 2009. The majority of the decline in sales of custom products
resulted from a $6.7 million decline in sales to a major OEM due to partial loss
of allocations to low cost Asian vendor sources and decreased demand for second
generation GSM equipment. The remaining $2.2 million decrease in fiscal 2010
custom shipments and the $4.2 million decrease in standard component shipments
resulted from the general decline in wireless infrastructure component demand in
fiscal 2010 compared to fiscal 2009 due to the general decline in the worldwide
economy and infrastructure capital expenditure levels which was reflected in a
general decline in shipments to both OEMs and distributors. The continuing
challenging pricing environment for both standard component and custom assembly
products also negatively impacted net sales in fiscal 2010 compared to last
year. This trend is expected to continue into fiscal 2011 as well.

Custom Wireless products are tied to specific base station designs and are much
more sensitive to actual customer design wins making future order levels
difficult to predict. Sales of custom products in fiscal 2011 are expected to be
lower compared to fiscal 2010 levels, and may be further impacted by the current
state of the economy and its impact on the level of worldwide infrastructure
spending. The Company's standard component products enjoy wide spread use in
base station applications across many different platforms and original equipment
manufacturers. Sales of these products in fiscal 2011 are tied to the overall
infrastructure spending and the current economic downturn.

Space & Defense Group products consist of custom components and assemblies for
communication satellites and defense radar, receiver, and countermeasure systems
for the military. Sales of Space & Defense Group products rose $15.0 million, or
15.2% in fiscal 2010 compared to the previous fiscal year. Sales of Space &
Defense Group products in the current fiscal year included twelve months of
sales from MSK and Unicircuit, totaling $50.4 million, while sales in fiscal
2009 included eleven months and ten months of sales from MSK and Unicircuit,
respectively, amounting to $37.5 million. This increase is attributed to
approximately $6.0 million from the additional three months sales not included
in fiscal 2009 and a $7.1 million increase in sales of Hybrid modules and RF
printed wire boards at MSK and Unicircuit, respectively, above fiscal 2009
levels due to the higher level of order intake for both subsidiaries over the
last two fiscal years. Space & Defense Group product sales continue to benefit
from the higher level of business won by the Company over the past two fiscal
years which has resulted in the Group's backlog of $89.6 million as of June 30,
2010.

Through fiscal 2010, the Company's defense business has felt little or no impact
from the current downturn in the economy as we experienced no cancellations or
significant push outs in deliveries under specific contracts. Based on the
current proposed defense budget for fiscal 2011, the Company does not expect any
contract cancellations or program discontinuations related to existing or
expected orders.

Gross Profit. Cost of sales consists primarily of engineering design costs,
materials, material fabrication costs, assembly costs, acquisition inventory
step-up amortization, intangible amortization, direct and indirect overhead, and
test costs. Gross profit for fiscal 2010 was $62.3 million, (36.9% of net
sales), up from $54.6 million (32.7% of net sales) for the prior year. Gross
profit as a percent of sales increased in fiscal 2010 from fiscal 2009 due to
the increase in sales volume and due to the absence in fiscal 2010 of $2.2
million (1.3% of net sales) of amortization of inventory step-up costs related
to the acquisition of MSK and Unicircuit, which were included in fiscal 2009
cost of sales. Additionally, gross margins were enhanced by a favorable product
mix including the $8.7 million decline in sales of lower margin, high material
content custom Wireless Group products which resulted in a $5.0 million
reduction in direct material costs and by reduced production overhead costs,
including personnel, freight, production supplies, and scrap in fiscal 2010
compared to fiscal 2009.


                                       18
<PAGE>

Marketing. Marketing expenses consist mainly of employee related expenses,
commissions paid to sales representatives, trade show expenses, advertising
expenses and related travel expenses. Marketing expenses were $9.7 million (5.7%
of net sales) for fiscal 2010, up $0.7 million from $9.0 million (5.4% of net
sales) for fiscal 2009. Marketing expenses in fiscal 2010 rose $0.7 million from
last fiscal year due to the inclusion of $2.6 million of marketing expenses from
Unicircuit and MSK in the current fiscal year, compared to $1.9 million for
these two subsidiaries in last fiscal year, which included only eleven months
and ten months of expense for MSK and Unicircuit, respectively. Absent these
additional costs, marketing expense was flat year over year, with increases in
the Space & Defense Group due to higher volume and opportunities being offset by
lower expense levels in the Wireless Group.

Research and Development. Research and development expenses consist of materials
and salaries and related overhead costs of employees engaged in ongoing
research, design and development activities associated with new products and
technology development. Research and development expenses were $14.8 million
(8.8% of net sales) in fiscal 2010, up 14% from $13.0 million (7.8% of net
sales) for fiscal 2009. Research and development expenditures are supporting
further development of Wireless Group infrastructure and consumer component
opportunities, as well as new technology development in the Space & Defense
Group. Research and development expenditures have increased in fiscal 2010
versus fiscal 2009 due to the higher level of opportunities in the Space &
Defense Group marketplaces which resulted in approximately $1.8 million in
additional spending for the Group compared to fiscal 2009. The Company expects
to continue its current research and development efforts and spending levels in
fiscal 2011, and is presently working on a number of new standard and custom
Wireless Group and Space & Defense Group opportunities.

General and Administrative. General and administrative (G&A) expenses consist of
employee related expenses, professional services, intangible amortization,
travel related expenses and other corporate costs. General and administrative
expenses were $19.0 million (11.3% of net sales) for fiscal 2010, up 2.2% from
$18.6 million (11.1% of net sales) for fiscal 2009. The increase in general and
administrative expense in fiscal 2010 compared to last year was due to the
inclusion of $6.1 million of general and administrative expenses from Unicircuit
and MSK in the current year, compared to $5.6 million for these two subsidiaries
in fiscal 2009, which included only eleven months and ten months of expense for
MSK and Unicircuit, respectively. This increase was partially off-set by a $0.3
million decline in compensation and other administrative expenses due to the
timing of the issuance of restricted stock, reduced professional service costs
and the consolidation of some administrative functions across all subsidiaries.
Cost reduction initiatives and process improvements will continue to be an
ongoing activity within the Company for fiscal 2011.

Operating Income. Operating income increased 33.9% in fiscal 2010 to $18.8
million, (11.1% of net sales), compared to $14.0 million (8.4% of net sales) for
fiscal 2009. The increase in fiscal 2010 operating income compared to fiscal
2009 was due to the absence of $2.2 million of amortization of inventory step-up
costs related to the acquisition of MSK and Unicircuit, which were included in
fiscal 2009 cost of sales. Operating margins were further enhanced by a
favorable product mix which resulted in lower material costs per sales dollar of
27.9% in fiscal 2010 compared to 31.2% in fiscal 2009 due mainly to a $8.7
million reduction in sales of high material content custom Wireless Group
products in the current fiscal year and the effects of ongoing cost reduction
initiatives throughout the Company which have had a significant positive effect
on overall Company expense levels. The Company plans on continuing with these
cost reduction initiatives through 2011.

On an operating segment basis, Wireless Group operating income was $5.1 million
(9.2% of Group sales) for fiscal 2010, down $1.5 million, from the Group's
operating income of $6.6 million (9.7% of Group sales) in fiscal 2009. The
decrease in Wireless Group operating income in fiscal 2010 compared to fiscal
2009 was a result of the $13.0 million decline in Wireless Group sales year over
year which resulted in a $2.5 million decline in gross margins for this business
segment. Despite the large decrease in sales, the Company was able to maintain
the level of operating income (9.2% of sales in fiscal 2010) due to the
improvement in gross margins as a percent of sales for the Group from 36.7% in
fiscal 2009 to 40.9% in fiscal 2010, brought about by a more favorable product
mix resulting from the $8.7 million Wireless Group sales decrease being low
margin, high material content custom products and reductions in manufacturing
costs due to the lower sales volume. Additionally, operating margins were
further enhanced by a $1.0 million (9%) decline in marketing and general and
administrative expenses within the Group in fiscal 2010 compared to fiscal 2009
due to the decline in the Group's sales volume.

Space & Defense Group operating income was $14.5 million (12.8% of Group sales)
in fiscal 2010, up $6.3 million from $8.2 million (8.3% of net Group sales) for
fiscal 2009. Operating margins for this Group improved approximately 50% in
fiscal 2010 due to the $14.9 million increase in sales and the inclusion of only
$0.9 million of acquisition related intangible amortization costs and no
inventory step-up costs in fiscal 2010, compared to $2.9 million of combined
acquisition related inventory step-up and intangible amortization costs caused
by the acquisition of MSK and Unicircuit in fiscal 2009. Group operating margins
were further enhanced as a result of a more favorable product mix which resulted
in a 1% decline in material costs as a percent of sales for the Group in fiscal
2010, production economies of scale due to the sales increase and the cost
savings achieved through the Company's cost reduction efforts. The Company plans
on continuing with these cost reduction initiatives through 2011.

Other Income. Other income decreased to $0.4 million in fiscal 2010 compared to
$1.1 million for fiscal 2009. This decrease was


                                       19
<PAGE>

caused by the substantial decline in short-term interest rates year over year
and a deliberate shortening of the maturities of the Company's investment
portfolio due to the turmoil in the credit market. Other income will fluctuate
based on short term market interest rates, the company's cash investment
strategy and the level of investable cash balances.

Interest Expense. Interest expense in fiscal 2010 was $0.6 million compared to
$1.5 million for fiscal 2009. This decrease was due to the substantial decline
in the average 90 day London Interbank Offered Rate (LIBOR) interest rate
(approx. 0.4%) for fiscal 2010 compared to the average rate (approx. 2.2%) for
fiscal 2009. The Company borrowed a total of $49.8 million under its $50.0
million revolving credit facility in the first quarter 2009 and repaid $9.8
million in the first quarter of fiscal 2010. These borrowings bear interest at
the 90 day LIBOR rate, plus 100 to 425 basis points, depending upon the
Company's rolling twelve month earnings before interest, taxes, depreciation and
amortization (EBITDA) performance. The rate is reset quarterly and for the first
quarter of fiscal 2011 is expected to be approximately 1.25%.

Income Taxes. Income taxes for fiscal 2010 were $4.9 million (2.9% of net
sales), representing an effective tax rate of 26.1%. This compares to income tax
expense of $3.8 million (2.3% of net sales) for fiscal 2009, representing an
effective tax rate of 27.7%. The projected effective tax rate for fiscal year
2011, absent one-time events is expected to be approximately 32.0%. The
effective tax rate for fiscal 2010 was a result of the adjustments to reserves
for uncertain tax positions related to the results of the IRS examination
amounting to a reduction in tax expense of approximately $1.0 million.


Year Ended June 30, 2009 Compared to Year Ended June 30, 2008

Net sales. Net sales were $166.9 million for the year ended June 30, 2009, up
27.1% compared to $131.3 million for the fiscal 2008 and included $37.5 million
of sales from MSK and Unicircuit in fiscal 2009. Shipments of Wireless Group
products fell $10.1 million, or 12.9%, and sales of Space & Defense Group
products rose $45.7 million, or 86.9%, in fiscal 2009 compared to fiscal 2008.

The decline in Wireless Group sales was the result of a decline in demand for
custom components during fiscal 2009 compared to fiscal 2008. Sales of custom
products fell $12.1 million, or 38.0% in fiscal 2009 compared to fiscal 2008,
reflecting the overall worldwide economic slowdown and delays in a new platform
introduction at a large Wireless customer. This decline was partially off-set by
a $1.6 million, or 41%, increase in consumer product sales in fiscal 2009
compared to fiscal 2008 resulting from new design wins in the handset sector and
a $0.5 million increase in standard component sales year over year in fiscal
2009.

Sales of Space & Defense Group products rose $45.7 million, or 86.9% in fiscal
year 2009 compared to fiscal year 2008. Space & Defense Group sales in fiscal
year included $37.5 million of sales from MSK and Unicircuit Additionally, sales
of catalog and passive devices rose due to shipments of Counter-Improvised
Explosive Device (Counter-IED) products, which increased to $6.7 million in
fiscal 2009 compared to $1.0 million in fiscal 2008. Existing Space & Defense
Group product sales in fiscal 2009 continued to benefit from the higher level of
business won by the Company over the previous few fiscal years, with orders in
fiscal 2009 exceeding $98.0 million.

Gross Profit. Gross profit represents net sales minus cost of sales. Gross
profit for fiscal 2009 was $54.6 million (32.7% of net sales), up from $40.5
million (30.8% of net sales) for the prior year. Gross profit, as a percent of
sales, increased in fiscal 2009 compared to fiscal 2008 due to the decrease in
sales of lower margin custom Wireless Group products, a more favorable sales mix
in the Space & Defense Group and, comparable gross margin at MSK and Unicircuit
compared to the Company's other operations. The improvement in gross margins of
approximately 2.0% for fiscal 2009 resulted from fairly equal percentage
improvements at all of the Company's operations.

Marketing. Marketing expenses in fiscal 2009 were $9.0 million (5.4% of net
sales), compared to $7.0 million (5.3% of net sales) in fiscal 2008, a $2.0
million increase which included the addition of $1.9 million of marketing
expenses from Unicircuit and MSK as well as expenses for additional sales and
marketing personnel and higher commission expenses resulting from the overall
sales mix. This increase was partially offset by an accounting adjustment in the
second quarter of fiscal 2009 resulting in a reduction of commission expense of
$275,000 to correct an over accrual that was accumulated over a number of prior
periods.

Research and Development. Research and development expenses were $13.0 million
(7.8% of net sales) in fiscal 2009, up 24.7% from $10.4 million (7.9% of net
sales) for fiscal 2008. Research and development expenditures were supporting
further development of the Wireless Group infrastructure and consumer component
opportunities, as well as new technology development in the Space & Defense
Group. Research and Development expenditures increased in fiscal 2009 versus
fiscal 2008 due to the higher level of opportunities in both the Wireless Group
and Space & Defense Group marketplaces which resulted in approximately $977,000
in additional spending at our Anaren Ceramics and Anaren Microwave operations.
The addition of MSK and Unicircuit accounted for the remaining $1.6 million of
the increase in fiscal 2009 compared to fiscal 2008.

General and Administrative. General and administrative expenses increased $5.0
million, to $18.6 million (11.2% of net sales) for


                                       20
<PAGE>

fiscal 2009, from $13.6 million (10.4% of net sales) for fiscal 2008. The
increase in general and administrative expense in fiscal 2009 compared to fiscal
2008 resulted from additional personnel in the finance, human resource and
information technology functions, and the inclusion of $5.6 million in
additional G&A costs including intangible amortization of $0.9 million from the
acquisition of MSK and Unicircuit. This increase was partially off-set by a
decline in G&A costs in fiscal 2009 compared to fiscal 2008, achieved by
consolidating subsidiary operations at the Ceramics operations of $0.7 million.

Operating Income. Operating income rose 52.2% in fiscal 2009 to $14.0 million,
(8.4% of net sales), compared to $9.2 million (7.0% of net sales) for fiscal
2008. This increase was due mainly to the improvement in profitability in the
second half of fiscal 2009 resulting from the higher overall sales volume and
$2.5 million in operating profitability contributed by MSK and Unicircuit, the
Company's new subsidiaries acquired in the first quarter of fiscal 2009.
Operating income as a percent of sales increased in fiscal 2009 compared to
fiscal 2008, due to a significant increase in third and fourth quarter
profitability, despite the inclusion of $3.2 million of combined acquisition
related inventory step-up costs and intangible amortization for fiscal 2009, due
to a higher margin product mix compared to fiscal 2008.

On an operating segment basis, Wireless Group operating income was $6.6 million
for fiscal 2009, up $3.0 million from $3.6 million in fiscal 2008. The increase
in Wireless Group operating income in fiscal 2009 compared to fiscal 2008,
despite the decline in Wireless Group sales, was due to a more favorable sales
mix which included increased higher margin standard component sales and
decreased lower margin custom product sales in fiscal 2009 compared to fiscal
2008. Additionally, Wireless Group margins were further enhanced by the overall
increase in corporate sales volume which had a positive impact on overhead
absorption.

Space & Defense Group's operating income was $8.2 million in fiscal 2009, up
$2.0 million, or 33.3%, from $ 6.2 million for fiscal 2008. Operating margins in
this Group rose in fiscal 2009 due to the large increase in sales and the
addition of the two new subsidiaries, MSK and Unicircuit Operating margin as a
percent of sales was 8.3% in fiscal 2009 compared to 11.7% in fiscal 2008. The
drop in operating income as a percent of sales in fiscal 2009 was due to the
inclusion of $3.2 million (3.3% of Space & Defense sales) of combined
acquisition related inventory step-up and intangible amortization costs
resulting from the acquisition of MSK and Unicircuit and a $2.0 million increase
in Space & Defense Group R&D expense in fiscal 2009 compared to fiscal 2008 at
the Company's East Syracuse operation related to a number of new defense
projects.

Other Income. Other income primarily consists of interest income received on
invested cash balances and rental income. Other income decreased 53.2% to $1.1
million in fiscal 2009 compared to $2.3 million for fiscal 2008. This decrease
was caused by the decline in available investable cash due to the purchase of
treasury shares in the first quarter of fiscal 2009 and the decline in interest
rates year over year.

Interest Expense. Interest expense consists mainly of interest on Company
borrowings and deferred items. Interest expense in fiscal 2009 was $1.5 million
(0.9% of net sales), compared to $0.1 million for fiscal 2008. This increase was
due to the interest expense generated by the Company's borrowings starting in
the first quarter of fiscal 2009 to finance the acquisitions of MSK and
Unicircuit The Company borrowed a total of $49.8 million under its $50.0 million
revolving declining line of credit in the first quarter. These borrowings bear
interest at the 90 day LIBOR, plus 100 to 425 basis points, depending upon the
Company's rolling twelve month EBITDA performance. The rate is reset quarterly
and was approximately 2.5% for the fourth quarter of fiscal 2009.

Income Taxes. Income taxes for fiscal 2009 were $3.8 million (2.3% of net
sales), representing an effective tax rate of 27.7%. This compares to income tax
expense of $3.0 million (2.3% of net sales) for fiscal 2008, representing an
effective tax rate of 26.1%. The Company's effective tax rate is a direct result
of the proportion of federally exempt state municipal bond income and federal
tax credits and benefits in relation to the levels of United States and foreign
taxable income or loss and in fiscal 2009 reflects adjustments and provisions of
completed and ongoing state and federal tax audits.

Discontinued Operations. Income from discontinued operations for fiscal 2008
included $0.8 million due to the reduction of an unrecognized tax benefit
resulting from the lapse of the applicable statute of limitations related to the
prior dissolution of the Company's European subsidiary, Anaren Europe, B.V.


                                       21
<PAGE>

Critical Accounting Policies and Estimates

The Company prepares the consolidated financial statements in accordance with
accounting principles generally accepted in the U.S. In doing so, the Company
has to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, as well as related disclosure of
contingent assets and liabilities. In some cases, the Company could have
reasonably used different accounting policies and estimates. In some cases,
changes in the accounting estimates are reasonably likely to occur from period
to period. Accordingly, actual results could differ materially from the
estimates made in the financial statements. To the extent that there are
material differences between these estimates and actual results, the Company's
financial condition or results of operations will be affected. Estimates are
based on past experience and other assumptions that the Company believes are
reasonable under the circumstances, and they are evaluated on an ongoing basis.
The Company refers to accounting estimates of this type as critical accounting
policies and estimates, which are discussed further below. The Company has
reviewed the critical accounting policies and estimates with the audit committee
of the board of directors.

Income Taxes

In accordance with the liability method of accounting for income taxes, the
provision for income taxes is the sum of income taxes both currently payable and
deferred. The changes in deferred tax assets and liabilities are determined
based upon the changes in differences between the bases of assets and
liabilities for financial reporting purposes and the tax bases of assets and
liabilities as measured by the enacted tax rates that management estimates will
be in effect when the differences reverse.

Beginning in 2007, the Company adopted the standards that govern the accounting
for uncertainty in income taxes, to assess and record income tax uncertainties.
The standards prescribe a recognition threshold and measurement attribute for
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return and also provides guidance on various
related matters such as derecognition, interest and penalties, and disclosure.

In relation to recording the provision for income taxes, management must
estimate the future tax rates applicable to the reversal of temporary
differences, make certain assumptions regarding whether book/tax differences are
permanent or temporary and if temporary, the related timing of expected
reversal. Also, estimates are made as to whether taxable operating income in
future periods will be sufficient to fully recognize any gross deferred tax
assets. If recovery is not likely, the Company must increase its provision for
taxes by recording a valuation allowance against the deferred tax assets that
are estimated will not ultimately be recoverable. Alternatively, the Company may
make estimates about the potential usage of deferred tax assets that decreases
the valuation allowances.

The calculation of our tax liabilities involves dealing with uncertainties in
the application of complex tax regulations. Significant judgment is required in
evaluating our tax positions and determining our provision for income taxes.
During the ordinary course of business, there are many transactions and
calculations for which the ultimate tax determination is uncertain. The Company
establishes reserves for uncertain tax positions when it believes that certain
tax positions do not meet the more likely than not threshold. The Company
adjusts these reserves in light of changing facts and circumstances, such as the
outcome of a tax audit or the lapse of the statute of limitations. The provision
for income taxes includes the impact of reserve provisions and changes to the
reserves that are considered appropriate. The Company follows FASB ASC 740,
Income Taxes for accounting for our uncertain tax positions.

Changes could occur that would materially affect our estimates and assumptions
regarding deferred taxes. Changes in current tax laws and tax rates could affect
the valuation of deferred tax assets and liabilities, thereby changing the
income tax provision. Also, significant declines in taxable income could
materially impact the realizable value of deferred tax assets. At June 30, 2010,
we had $9.7 million of deferred tax assets on our balance sheet and a valuation
allowance of $0.5 million has been established for certain deferred tax assets
as it is more likely than not that they will not be realized.

A 1% increase in the effective tax rate would increase the current year
provision by $0.2 million, reducing diluted earnings per share by $0.01 based on
shares outstanding at June 30, 2010.

Equity Based Compensation

The Company records compensation costs related to stock-based awards in
accordance with the share-based payment accounting rules and related Securities
and Exchange Commission rules. Under the fair value recognition provisions of
the guidance, the Company measures stock-based compensation cost at the grant
date based on the fair value of the award.

Compensation cost for service-based awards is recognized ratably over the
applicable vesting period. Compensation cost for performance-based awards is
reassessed each period and recognized based upon the probability that the
performance targets will be achieved. The amount of stock-based compensation
expense recognized during a period is based on the portion of the awards that
are ultimately expected to vest. The total expense recognized over the vesting
period will only be for those awards that ultimately vest.

The Company utilizes the Black-Scholes Options Pricing Model to determine the
fair value of stock options under the stock option


                                       22
<PAGE>

guidance. The Company is required to make certain assumptions with respect to
selected Black Scholes model inputs, including expected volatility, expected
life, expected dividend yield and the risk-free interest rate. Expected
volatility is based on the historical volatility of the Company's stock over the
most recent period commensurate with the estimated expected life of the stock
options. The expected life of stock options granted, which represents the period
of time that the stock options are expected to be outstanding, is based,
primarily, on historical data. The expected dividend yield is based on history
and the expectation of dividend payouts. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant for a period
commensurate with the estimated expected life.

For restricted stock and restricted stock unit awards, the fair market value is
determined based upon the closing value of the Company's stock price on the
grant date.

Compensation cost for performance-based stock options and restricted stock units
is reassessed each period and recognized based upon the probability that the
performance targets will be achieved. That assessment is based upon the
Company's actual and expected future performance as well as that of the
individuals who have been granted performance-based awards.

Stock-based compensation expense is only recorded for those awards that are
expected to vest. Forfeiture estimates for determining appropriate stock-based
compensation expense are estimated at the time of grant based on historical
experience and demographic characteristics. Revisions are made to those
estimates in subsequent periods if actual forfeitures differ from estimated
forfeitures.

Option pricing models were developed for use in estimating the value of traded
options that have no vesting restrictions and are fully transferable. Because
our share-based payments have characteristics significantly different from those
of freely traded options, and because changes in the subjective input
assumptions can materially affect our estimates of fair values, existing
valuation models may not provide reliable measures of the fair values of our
share-based compensation. Consequently, there is a risk that our estimates of
the fair values of our share-based compensation awards may bear little
resemblance to the actual values realized upon the exercise, expiration or
forfeiture of those share-based payments in the future. Stock options may expire
worthless or otherwise result in zero intrinsic value as compared to the fair
values originally estimated on the grant date and reported in our consolidated
financial statements. Alternatively, value may be realized from these
instruments that are significantly in excess of the fair values originally
estimated on the grant date and reported in our consolidated financial
statements. There are significant differences among valuation models. This may
result in a lack of comparability with other companies that use different
models, methods and assumptions.

There is a high degree of subjectivity involved in selecting assumptions to be
utilized to determine fair value and forfeiture assumptions. If factors change
and result in different assumptions in the application of the share-based
payment accounting rules in future periods, the expense that we record for
future grants may differ significantly from what we have recorded in the current
period. Additionally, changes in performance of the Company or individuals who
have been granted performance-based awards that affect the likelihood that
performance based targets are achieved could materially impact the amount of
stock-based compensation expense recognized.

A 1% change in our stock based compensation expense would increase/decrease
current year net income by less than $0.1 million, and would have no effect on
the earnings per diluted share.

Impairment of Marketable and Non-Marketable Securities

The Company periodically reviews the marketable securities, as well as the
non-marketable securities for impairment. If we conclude that any of these
investments are impaired, we determine whether such impairment is
"other-than-temporary" as defined under the investment in debt and equity
security rules. Factors we consider to make such determination include the
duration and severity of the impairment, the reason for the decline in value and
the potential recovery period, and our intent and ability to hold an investment.
If any impairment is considered "other-than-temporary," the Company will write
down the asset to its fair value and take a corresponding charge to our
Consolidated Statement of Income. At June 30, 2010, the Company has $0.4 million
recorded in accumulated other comprehensive income related to a write-down of
its available-for-sale security. Currently this write-down is at the value that
is guaranteed by the federal government. A 1% change in the valuation of the
security would increase/decrease the Company's net assets by an immaterial
amount.

Valuation of Inventory

Inventories are stated at the lower of cost, determined using the first-in,
first-out method, or market. Inventory standard costing requires complex
calculations that include assumptions for overhead absorption, scrap, sample
calculations, manufacturing yield estimates and the determination of which costs
are capitalizable. The valuation of inventory requires the Company to estimate
obsolete or excess inventory as well as inventory that is not of saleable
quality. Variations in methods or assumptions could have a material impact on
the Company's results. If the Company's demand forecast for specific products is
greater than actual demand and it fails to reduce manufacturing output
accordingly, the Company could be required to record additional inventory
reserves, which would have a negative impact on net income. A 1% write-down of
our inventory would decrease current year net income by approximately $0.2
million, or approximately $0.01 per diluted share. As of June 30, 2010 we have
$31.4 million of inventory recorded on our balance sheet representing 13% of
total assets.


                                       23
<PAGE>

Employee Benefit Plans

The Company's noncontributory pension plan (the "Pension Plan") covers U.S.
employees who became eligible after one year of service. The benefit formula is
dependent upon employee earnings and years of service. Additionally, certain
healthcare benefits are available to eligible domestic employees who are
participants in the Pension Plan and meet certain age and service requirements
upon termination of employment (the "Postretirement Health Care Benefits Plan").
For eligible employees, the Company offsets a portion of the postretirement
medical costs to the retired participant based on length of service. Effective
August 15, 2000, the Pension Plan and the Postretirement Health Care Benefits
Plan were closed to new participants.

Accounting methodologies use an attribution approach that generally spreads
individual events over the service lives of the employees in the plan. Examples
of "events" are plan amendments and changes in actuarial assumptions such as
discount rate, expected long-term rate of return on plan assets, and rate of
compensation increases. The principle underlying the required attribution
approach is that employees render service over their service lives on a
relatively consistent basis and, therefore, the income statement effects of
pension benefits or postretirement health care benefits are earned in, and
should be expensed in, the same pattern.

There are various assumptions used in calculating the net periodic benefit
expense and related benefit obligations. One of these assumptions is the
expected long-term rate of return on plan assets. The required use of expected
long-term rate of return on plan assets may result in recognized pension income
that is greater or less than the actual returns of those plan assets in any
given year. Over time, however, the expected long-term returns are designed to
approximate the actual long-term returns and therefore result in a pattern of
income and expense recognition that more closely matches the pattern of the
services provided by the employees.

The Company uses longer-term historical actual return experience with
consideration of the expected investment mix of the plans' assets, as well as
future estimates of long-term investment returns, to develop its expected rate
of return assumption used in calculating the net periodic pension cost and the
net retirement healthcare expense. The Company's investment return assumption
for the Pension Plan was 8.5% for both fiscal 2010 and 2009. At June 30, 2010,
the Pension Plan was approximately 59% equity investments and 41% cash and fixed
income investments, while the Postretirement Health Care Benefits Plan was
unfunded.

A second key assumption is the discount rate. The discount rate assumptions used
for pension benefits and postretirement health care benefits accounting
reflects, at June 30 of each year, the prevailing market rates for high-quality,
fixed-income debt instruments that, if the obligation was settled at the
measurement date, would provide the necessary future cash flows to pay the
benefit obligation when due. The Company's discount rates for measuring its
pension obligations were 5.30% and 6.85% at June 30, 2010 and 2009,
respectively. The Company's discount rates for measuring the Postretirement
Health Care Benefits Plan obligation were 5.20% and 6.37% at June 30, 2010 and
2009, respectively.

A final set of assumptions involves the cost drivers of the underlying benefits.
The rate of compensation increase is a key assumption used in the actuarial
model for pension accounting and is determined by the Company based upon its
long-term plans for such increases. The Company's fiscal 2010, 2009 and 2008
rate for future compensation increase for the Pension Plan was 4%. For
Postretirement Health Care Benefits Plan accounting, the Company reviews
external data and its own historical trends for health care costs to determine
the health care cost trend rates. Based on this review, the health care cost
trend rates used to determine the June 30, 2010 accumulated postretirement
benefit obligation are 7.3% - 10.0% for 2010, with a declining trend rate of
about 0.8% - 0.4% each year until it reaches 5% by fiscal 2017, with a flat 5%
rate for fiscal 2017 and beyond.

For the fiscal years ended June 30, 2010, 2009 and 2008, the Company recognized
net periodic pension expense of $0.6 million, $0.3 million and $0.1 million,
respectively, related to its pension plan. Cash contributions of $.870 million
were made to the U.S. pension plans in fiscal 2010. The Company expects to make
cash contributions of approximately $0.2-$0.5 million to its pension plan during
fiscal 2011.

The 2010 and 2009 fiscal year Postretirement Health Care Benefits Plan actual
expenses were $0.1 million and $0.2 million, respectively. Cash contributions of
$0.1 million were made to this plan in fiscal 2010. The Company expects to make
$.2 million in cash contributions to the Postretirement Health Care Benefits
Plan in fiscal 2011.

Recent market conditions have resulted in an unusually high degree of volatility
and increased the risks and illiquidity associated with certain investments held
by the pension plans, which could impact the value of investments after the date
of this filing. The Company's measurement date of its plan assets and
obligations is June 30.


An award or incentive fee is usually variable, based upon specific performance
criteria stated in the contract. Award or incentive fees are recognized only
upon achieving the contractual criteria and after the customer has approved or
granted the award or incentive.

Assessment of Recoverability of Intangible and Long-Lived Assets

When the Company makes an acquisition, it allocates the purchase price to the
assets that are acquired and liabilities that are assumed based on their
estimated fair value at the date of acquisition. The Company then allocates the
purchase price in excess of net tangible


                                       24
<PAGE>

assets acquired to identifiable intangible assets. Other indefinite lived
intangible assets, such as tradenames, are considered non-amortizing intangible
assets as they are expected to generate cash flows indefinitely. Goodwill is
recorded when the purchase price paid for an acquisition exceeds the estimated
fair value of the net identified tangible and intangible assets acquired.
Indefinite lived intangibles and goodwill are required to be assessed for
impairment on an annual basis or more frequent if certain indicators are
present. Definite-lived intangible assets are amortized over their estimated
useful lives.

The Company bases the fair value of identifiable tangible and intangible assets
on detailed valuations that use information and assumptions provided by
management. The fair values of the assets acquired and liabilities assumed are
determined using one of three valuation approaches: market, income and cost. The
selection of a particular method for a given asset depends on the reliability of
available data and the nature of the asset, among other considerations. The
market approach values the subject asset based on available market pricing for
comparable assets. The income approach values the subject asset based on the
present value of risk adjusted cash flows projected to be generated by the
asset. The projected cash flows for each asset considers multiple factors,
including current revenue from existing customers, attrition trends, reasonable
contract renewal assumptions from the perspective of a marketplace participant,
and expected profit margins giving consideration to historical and expected
margins. The cost approach values the subject asset by determining the current
cost of replacing that asset with another of equivalent economic utility. The
cost to replace a given asset reflects the estimated reproduction or replacement
cost for the asset, less an allowance for loss in value due to depreciation or
obsolescence, with specific consideration given to economic obsolescence if
indicated.

The Company performs an annual review using March 31 as the test date, or more
frequently if indicators of potential impairment exist, to determine if the
recorded goodwill and other indefinite lived intangible assets are impaired. The
Company assesses goodwill for impairment by comparing the fair value of the
reporting units to their carrying value to determine if there is potential
impairment. If the fair value of a reporting unit is less than its carrying
value, an impairment loss is recorded to the extent that the implied fair value
of the goodwill within the reporting unit is less than its carrying value. Fair
values for reporting units are determined based primarily on the income
approach, however where appropriate, the market approach or appraised values are
also used. Definite-lived intangible assets such as purchased technology,
non-compete agreements, and customer lists are reviewed at least quarterly to
determine if any adverse conditions exist or a change in circumstances has
occurred that would indicate impairment or a change in their remaining useful
life. Indefinite lived intangible assets, such as tradenames, are evaluated for
impairment by using the income approach.

The use of alternative valuation assumptions, including estimated cash flows and
discount rates, and alternative estimated useful life assumptions could result
in different purchase price allocations. Significant changes in these estimates
and assumptions could impact the value of the assets and liabilities recorded
which would change the amount and timing of future intangible asset amortization
expense.

The Company makes certain estimates and assumptions that affect the
determination of the expected future cash flows from reporting units for its
goodwill impairment testing. These include sales growth, cost of capital, and
projections of future cash flows. The fair value exceeded the reporting units'
value for the Company's 2010 goodwill impairment test ranged from approximately
30% to 50%. Significant changes in these estimates and assumptions could create
future impairment losses to goodwill.

For indefinite lived assets, such as tradenames, the Company makes certain
estimates of revenue streams, royalty rates and other future benefits.
Significant changes in these estimates could create future impairments of these
indefinite lived intangible assets.

Estimation of the useful lives of definite-lived intangible assets requires
significant management judgment. Events could occur that would materially affect
the estimates of the useful lives. Significant changes in these estimates and
assumptions could change the amount of future amortization expense or could
create future impairments of these definite-lived intangible assets.

A 1% change in the amortization of our intangible assets would increase/decrease
current year amortization approximately $0.014 million and would have an
immaterial impact on net income and earnings per diluted share. As of June 30,
2010 the Company has $52.6 million of intangible assets recorded on our balance
sheet representing 22% of total assets. This includes $7.2 million of amortizing
intangible assets, $3.0 million of indefinite lived intangible assets and $42.4
million of goodwill.

Liquidity and Capital Resources

Net cash provided by operations for the years ended June 30, 2010, 2009 and 2008
was $28.1 million, $28.4 million and $12.0 million, respectively. The positive
cash flow from operations in fiscal 2010 was due to profit before depreciation
and amortization of $10.2 million and equity based compensation expense of $3.8
million. 2010 operating cash flow was further enhanced by a decrease in
inventory of $3.9 million, which was partially off-set by a net increase in
receivables of $3.6 million. The positive cash flow from operations in fiscal
2009 was due to income before depreciation and amortization of $9.8 million,
equity based compensation of $4.0 million and was further enhanced by a combined
decrease in inventory and accounts receivable of $7.9 million. In fiscal year
2008 the positive cash flow from operations was due primarily to income before
depreciation and amortization of $7.4 million, equity


                                       25
<PAGE>

based compensation of $3.7 million, and was partially off-set by a combined
increase in inventory and accounts receivable amounting to $6.0 million.

Net cash used in investing activities in fiscal 2010 was $13.1 million and
consisted of $8.5 million from the net purchase of marketable debt securities
and $4.9 million used to pay for capital additions. Net cash used in investing
activities in fiscal 2009 was $35.7 million and consisted of net maturities of
marketable debt securities of $19.3 million, net of capital expenditures of $6.8
million and payments of $48.2 million used to purchase MSK and Unicircuit in the
first quarter of that fiscal year. Net cash provided by investing activities in
fiscal 2008 was $20.1 million and consisted of net maturities of marketable debt
securities of $32.5 million, less capital expenditures of $12.4 million.

Net cash used in financing activities in fiscal 2010 was $14.4 million and
consisted of $9.8 million used to pay long-term debt and $7.9 million used to
purchase approximately 560,000 treasury shares, net of $3.3 million generated by
cash receipts and tax benefits from the exercise of stock options. Net cash
provided by financing activities in fiscal 2009 was $46.4 million and consisted
of $2.7 million received from the exercise of stock options and borrowings of
$49.8 million under the Company's revolving declining line of credit to finance
the acquisitions of MSK and Unicircuit, net of $1.2 million used to pay off an
acquired mortgage and $5.0 million used to purchase 471,000 treasury shares. Net
cash used in financing activities in fiscal 2008 was $29.5 million. In fiscal
2008, $784,000 was provided by cash and tax benefits resulting from stock option
exercises and $30.2 million was used to purchase 2.0 million shares of the
Company's common stock for treasury.

The Company expects to continue to purchase shares of its common stock in the
open market and/or through private negotiated transactions under the current
Board authorization, depending on market conditions. At June 30, 2010, there
were approximately 516,000 shares remaining under the current Board repurchase
authorization.

At June 30, 2010, the Company had approximately $73.7 million in cash, cash
equivalents, and marketable securities and has had positive operating cash flow
for over ten consecutive years. 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 its newly secured line of
credit.

At June 30, 2010, as a result of the decline in the stock market, the assets in
the Company's defined benefit plan have declined approximately 6% from July 1,
2007 when the plan was considered to be fully funded. Due to this decline, the
Company was required to make a $0.1 million deposit into the plan by March 15,
2009 to meet the 92% funding requirement for the July 1, 2008 measurement date
and made an additional contribution of approximately $0.6 million by March 2010
to meet the 94% funding requirement for the July 1, 2009 measurement date
valuation. Despite the partial recovery in the market in fiscal 2010, it is
likely that the Company will have to make additional contributions of between
$0.2 million and $0.5 million to the Pension Plan by March 2011 to meet the
current required funding standards as of July 1, 2010. Additionally, due to a
decline in the market value of the Pension Plan's assets, it is expected that
the net periodic pension benefit cost will be approximately $0.6 million in
fiscal 2011.

At June 30, 2010, the Company had $40.0 million outstanding under its note of
which $10.0 million was scheduled for repayment on July 31, 2010. The Company
has made this payment from its currently available cash balances in July 2010.
Availability of credit under the line declines 20% annually on the anniversary
date of the note and any outstanding principal balance in excess of the new line
limit is due and payable at that time.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements within the meaning of Item 303(a) (4)
of Reg S-K, other than operating leases which do not represent a significant
cost to the Company.


                                       26
<PAGE>

Disclosures About Contractual Obligations and Commercial Commitments
Accounting standards require disclosure concerning the Company's obligations and
commitments to make future payments under contracts, such as debt and lease
agreements, and under contingent commitments, such as debt guarantees. The
Company's obligations and commitments are as follows:

<TABLE>
<CAPTION>
(in thousands)                                       Payment Due by Period
                                             Less
Contractual Obligations          Total    Than  1 Yr.    2 - 3 Yrs.    4 - 5 Yrs.    Over 5 Yrs.
                                 -------  -----------    ----------    ----------    -----------
<S>                              <C>        <C>           <C>            <C>            <C>
Contractual obligations
Debt and Interest Payments       $40,823    $10,400       $20,412        $10,011        $   --
Operating Lease Obligations        2,184      1,062           860            262            --
Other Long-Term Liabilities(1)       425         65           130            130           100
Pension Benefits                   5,698        591         1,279          1,367         1,819
</TABLE>

The unrecognized tax benefits that are recorded in other long-term liabilities
in the Company's condensed consolidated balance sheet are not anticipated to be
paid within one year of the balance sheet date; and the time period for when a
cash payout on these unrecognized tax benefits can not be anticipated or
estimated do to the uncertainty and as such are not included in the above table.

      (1) Deferred Compensation

Recent Accounting Pronouncements

In October 2009, new accounting guidance was issued related to the accounting
for revenue recognition from arrangement with multiple deliverables. This
guidance removes the "objective-and-reliable-evidence-of-fair-value" criterion
from the separation criteria used to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting, replaces
references to "fair value" with "selling price" to distinguish from the fair
value measurements required under the "Fair Value Measurements and Disclosures"
guidance, provides a hierarchy that entities must use to estimate the selling
price, eliminates the use of the residual method for allocation, and expands the
ongoing disclosure requirements. This update is effective for the Company
beginning July 1, 2011 and can be applied prospectively or retrospectively.
Management is currently evaluating the effect that adoption of this update will
have, if any, on the Company's consolidated financial statements when it becomes
effective in 2012.

In January 2009, new accounting guidance which requires more detailed
disclosures about employers' plan assets, including employers' investment
strategies, major categories of plan assets, concentrations of risk within plan
assets, and valuation techniques used to measure the fair value of plan assets.
Other than for some additional disclosures in the Annual Report on Form 10-K,
adoption of this guidance will not have an effect on the Company's 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.

As of June 30, 2010, the Company had cash, cash equivalents and marketable
securities of $73.7 million, all of which consisted of highly liquid investments
in marketable debt securities. The marketable debt securities at date of
purchase normally have maturities between one and 18 months, are exposed to
interest rate risk and will decrease in value if market interest rates increase.
A hypothetical decrease in market interest rate of 10.0% from June 30, 2010
rates, or 0.05%, would have reduced net income and cash flow by approximately
$34,000, or $0.0023 per diluted share of common stock for the year. Due to the
relatively short maturities of these securities and the Company's ability to
hold those investments to maturity, we do not believe that an immediate decrease
in interest rates would have a material effect on our financial condition or
results of operations. Over time, however, declines in interest rates will
reduce the Company's interest income.

As of June 30, 2010, the Company had $40.0 million in outstanding debt under its
revolving line of credit with Keybank. The line consists of a $50.0 million
revolving credit note (Note 8) for which principal amounts are due on July 31,
2010, and on each anniversary date thereafter through July 31, 2013. Borrowings
under the Note, at the Company's choice, bear interest at LIBOR, plus 100 to 425
basis points or at the Keybank's prime rate, minus (100) to plus 225 basis
points, depending upon the Company's EBITDA


                                       27
<PAGE>

performance at the end of each quarter as measured by the formula: EBITDA
divided by the Current Portion of Long-term Debt plus interest expense. For the
three months ended June 30, 2010, the weighted average interest rate on the
outstanding borrowings was 1.29%. Interest expense for these borrowings is
exposed to interest rate risk and will increase if market interest rates rise. A
hypothetical increase in market interest rate of 10.0% from June 30, 2010 rates,
or 0.129%, would have reduced net income and cash flow by approximately $33,000,
or $.002 per diluted share for the year ending June 30, 2010.

Item 8. Financial Statements and Supplementary Data

The information required by this item 8, is incorporated herein by reference
from the report of independent Registered Public Accounting Firms and from our
consolidated financial statements, notes to consolidated financial statements
and supplementary data: quarterly financial data (unaudited) Note (19) included
in this Annual Report on Form 10-K in Part IV, Item 15. Exhibits and Financial
Statements Schedules.

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

Not Applicable.

Item 9A. Controls and Procedures

A.    Disclosure Controls and Procedures

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

B.    Changes in Internal Control Over Financial Reporting

There were no changes in the registrant's internal control over financial
reporting during the year ended June 30, 2010 to which this Annual Report Form
10-K relates that have materially affected, or are reasonably likely to
materially affect, internal control over financial reporting.


                                       28
<PAGE>

     MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Anaren, Inc. is responsible for establishing and maintaining an
adequate system of internal control over financial reporting. This system is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.

The Company's internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company's assets that could have a
material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial
reporting can provide only reasonable assurance and may not prevent or detect
misstatements. Further, because of changes in conditions, effectiveness of
internal controls over financial reporting may vary over time. Our system
contains self-monitoring mechanisms, and actions are taken to correct
deficiencies as they are identified.

Management conducted an evaluation of the effectiveness of the system of
internal control over financial reporting based on the framework in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on this evaluation,
management concluded that the Company's system of internal control over
financial reporting was effective as of June 30, 2010.

The effectiveness of the Company's internal control over financial reporting has
been audited by Deloitte and Touche LLP, an independent registered public
accounting firm, as stated in their report which is included herein.


                                       29
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Anaren, Inc.
East Syracuse, New York

We have audited the internal control over financial reporting of Anaren, Inc.
and subsidiaries (the "Company") as of June 30, 2010, based on criteria
established in Internal Control -- Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Company's management
is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management's Annual Report on
Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company's internal control over financial reporting based on our
audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

A company's internal control over financial reporting is a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of June 30, 2010, based on the
criteria established in Internal Control -- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended June 30, 2010 of the Company and our
report dated August 13, 2010 expressed an unqualified opinion on those financial
statements.

/s/ Deloitte & Touche LLP

Rochester, New York
August 13, 2010


                                       30
<PAGE>

Item 9B. Other Information
Not Applicable.


                                       31
<PAGE>

                                    PART III

Item 10. Directors, Executive Officers and Corporate Governance

Except for the information under the heading "Executive Officers of the Company"
in Part I, Item 1 of this Annual Report on Form 10-K, which is incorporated by
reference in this item and the information about our Code of Ethics and Business
Conduct below, the information required by this Item 10 is incorporated by
reference from our definitive proxy statement to be filed with the Securities
and Exchange Commission in connection with the Annual Meeting of Shareholders to
be held in 2010 (the "2010 Proxy Statement").

Our Board of Directors adopted Anaren's Code of Ethics and Business Conduct
(Code), which outlines the ethical principles that provide the foundation for
the Company's dealings with customers, suppliers, shareholders, the investment
community and employees. The Code is applicable to all employees including
executive officers, and to the Company's directors. The Code, as revised in
February 2006, has been distributed to all employees and is publically available
for review on the Company's website, www.anaren.com under Investors/Governance.
If the Company makes any substantive amendments to the Code or grants any
waiver, including any implicit waiver, from a provision of the Code to an
executive officer, the Company will disclose the nature of the amendment or
waiver on its website at www.anaren.com under Investors/Governance.

Item 11. Executive Compensation

Information required by this Item is incorporated by reference to the 2010 Proxy
Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

Information required by this Item is incorporated by reference to the 2010 Proxy
Statement.

Item 13. Certain Relationships and Related Transactions, and Director
Independence

Information required by this Item is incorporated by reference to the 2010 Proxy
Statement.

Item 14. Principal Accounting Fees and Services

Information required by this Item is incorporated by reference to the 2010 Proxy
Statement.


                                       32
<PAGE>

                                     PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this Annual Report on Form 10K:

1. Financial Statements

                                                                          Page
   Reports of Independent Registered Public Accounting Firms             37 - 38
   Consolidated Balance Sheets as of June 30, 2010 and 2009                39
   Consolidated Statements of Income for the years ended June 30, 2010,
   2009 and 2008                                                           40
   Consolidated Statements of Stockholders' Equity and Comprehensive
   Income for the years ended June 30, 2010, 2009 and 2008                 41
   Consolidated Statements of Cash Flows for the years ended  June 30,
   2010, 2009 and 2008                                                     42
   Notes to Consolidated Financial Statements                            43 - 66

2.  Financial Statement Schedules
    None

3. Exhibits

   The exhibits listed in the accompanying Index to Exhibits are filed or
   incorporated herein by reference as part of this Annual Report on Form 10K.


                                       33
<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, INC.

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

Date: August 13, 2010

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:

      Signature                          Title                        Date
/s/ Lawrence A. Sala      President, Chief Executive Officer    August 13, 2010
--------------------      and Chairman of the Board, Director
Lawrence A. Sala          (Principal Executive Officer)


/s/ George A. Blanton     Sr. Vice President, Chief             August 13, 2010
---------------------     Financial Officer, Treasurer
George A. Blanton         (Principal Financial Officer)


/s/ Carl W. Gerst, Jr.    Chief Technical Officer, Vice         August 13, 2010
----------------------    Chairman of the Board and Director
Carl W. Gerst, Jr.

/s/ Dale F. Eck           Director                              August 13, 2010
---------------
Dale F. Eck

/s/ Matthew S. Robison    Director                              August 13, 2010
----------------------
Matthew S. Robison

/s/ David L. Wilemon      Director                              August 13, 2010
--------------------
David L. Wilemon

/s/ James G. Gould        Director                              August 13, 2010
------------------
James G. Gould

/s/ Robert U. Roberts     Director                              August 13, 2010
---------------------
Robert U. Roberts

/s/ John L. Smucker       Director                              August 13, 2010
-------------------
John L. Smucker

/s/ Patricia T. Civil     Director                              August 13, 2010
---------------------
Patricia T. Civil

/s/ Louis J. De Santis    Director                              August 13, 2010
----------------------
Louis J. De Santis


                                       34
<PAGE>

                                  ANAREN, INC.

                        Consolidated Financial Statements

                             June 30, 2010 and 2009

     (With Report of Independent Registered Public Accounting Firms Thereon)


                                       35
<PAGE>

                                  ANAREN, INC.

                                      Index

The following documents are filed as part of this report:
                                                                           Page

Reports of Independent Registered Public Accounting Firms                37 - 38
Consolidated Balance Sheets as of June 30, 2010 and 2009                    39
Consolidated Statements of Income for the years ended
  June 30, 2010, 2009 and 2008                                              40
Consolidated Statements of Stockholders' Equity and Comprehensive
  Income for the years ended June 30, 2010, 2009 and 2008                   41
Consolidated Statements of Cash Flows for the years ended
  June 30, 2010, 2009 and 2008                                              42
Notes to Consolidated Financial Statements                               43 - 66


                                       36
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Anaren, Inc.
East Syracuse, New York

We have audited the accompanying consolidated balance sheets of Anaren, Inc. and
subsidiaries (the "Company") as of June 30, 2010 and 2009, and the related
consolidated statements of income, stockholders' equity and comprehensive
income, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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, such 2010 and 2009 consolidated financial statements present
fairly, in all material respects, the financial position of Anaren, Inc. and
subsidiaries at June 30, 2010 and 2009, and the results of their operations and
their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the Company's internal control over
financial reporting as of June 30, 2010, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated August 13, 2010
expressed an unqualified opinion on the Company's internal control over
financial reporting.

/s/ Deloitte & Touche LLP

Rochester, New York
August 13, 2010


                                       37
<PAGE>

             Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders
Anaren, Inc.:

We have audited the accompanying consolidated statements of income,
stockholders' equity and comprehensive income, and cash flows for the year ended
June 30, 2008. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards
as established by the Auditing Standards Board (United States) and in accordance
with the auditing standards of the Public Company Accounting Oversight Board
(United States). 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 also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, Anaren, Inc. and subsidiaries results of
operations and cash flows for the year ended June 30, 2008, in conformity with
U.S. generally accepted accounting principles.

As discussed in note 15 to the consolidated financial statements, the Company
adopted the accounting rules for uncertainty in income taxes, effective July 1,
2007.

/s/ KPMG LLP

Syracuse, New York
September 15, 2008


                                       38
<PAGE>

                                  ANAREN, INC.
                           Consolidated Balance Sheets
                             June 30, 2010 and 2009
                    (in thousands, except per share amounts)

                                                            2010          2009
                                                          ---------    ---------
                         ASSETS
                         ------
Assets:
     Cash and cash equivalents                            $  50,521    $  49,893
     Securities held to maturity                              2,334       11,810
     Receivables, less allowances of $375 and $397
        in 2010 and 2009, respectively                       29,124       24,465
     Inventories                                             31,361       35,282
     Prepaid expenses and other current assets                2,916        4,033
     Deferred income taxes                                    1,955        1,547
                                                          ---------    ---------
        Total current assets                                118,211      127,030
     Securities available-for-sale                            1,051        1,051
     Securities held to maturity                             19,756        2,079
     Other assets                                             1,031           27
     Property, plant, and equipment, net                     48,711       52,889
     Goodwill                                                42,435       42,635
     Other intangible assets, net of
     accumulated amortization                                10,153       11,344
                                                          ---------    ---------
     Total assets                                         $ 241,348    $ 237,055
                                                          =========    =========

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------
Liabilities and Shareholders' Equity:
      Current installments of long-term debt obligation   $  10,000    $   9,800
      Accounts payable                                        9,271        6,991
      Accrued expenses                                        5,661        5,208
      Deferred income taxes                                      --          177
      Customer advance payments                                 888          118
      Other current liabilities                               2,920        2,525
                                                          ---------    ---------
        Total current liabilities                            28,740       24,819
     Deferred income taxes                                      726        2,103
     Pension and postretirement benefit obligation            7,083        6,496
     Long-term debt obligation                               30,000       40,000
     Other liabilities                                        1,873        2,692
                                                          ---------    ---------
     Total liabilities                                       68,422       76,110
                                                          ---------    ---------
Commitments and contingencies (notes 17 and 18)
Stockholders' Equity:
      Common stock, $0.01 par value. Authorized 200,000
      shares; issued 28,506 and 28,007 at June 30, 2010
      and 2009, respectively                                   285          280
      Additional paid-in capital                           206,193      199,597
      Retained earnings                                    118,111      104,399
      Accumulated other comprehensive loss                  (2,813)      (2,397)
                                                         ---------    ---------
                                                           321,776      301,879
       Less 13,811 and 13,251 treasury shares at
         June 30, 2010 and 2009, respectively, at cost     148,850      140,934
                                                         ---------    ---------
        Total stockholders' equity                         172,926      160,945
                                                         ---------    ---------
      Total liabilities and stockholders' equity         $ 241,348    $ 237,055
                                                         =========    =========

           See accompanying notes to consolidated financial statements


                                       39
<PAGE>

                                  ANAREN, INC.
                        Consolidated Statements of Income
                    Years ended June 30, 2010, 2009 and 2008
                    (in thousands, except per share amounts)

                                               2010         2009         2008
                                            ---------    ---------    ---------
Net Sales                                   $ 168,789    $ 166,905    $ 131,316
Cost of Sales                                 106,512      112,289       90,838
                                            ---------    ---------    ---------
        Gross profit                           62,277       54,616       40,478
Operating Expenses:
   Marketing                                    9,671        8,967        7,019
   Research and development                    14,782       12,986       10,410
   General and administrative                  19,040       18,636       13,592
   Restructuring                                   --           --          255
                                            ---------    ---------    ---------
        Total operating expenses               43,493       40,589       31,276
                                            ---------    ---------    ---------
        Operating income                       18,784       14,027        9,202
Other income (expense):
   Interest expense                              (590)      (1,482)         (79)
   Other, primarily interest income               368        1,088        2,322
                                            ---------    ---------    ---------
        Total other income (expense), net        (222)        (394)       2,243
                                            ---------    ---------    ---------
        Income from continuing
        operations before income taxes         18,562       13,633       11,445
Income tax expense                              4,850        3,774        2,982
                                            ---------    ---------    ---------
        Income from continuing operations      13,712        9,859        8,463

Discontinued operations:
   Income tax benefit                              --           --          770
                                            ---------    ---------    ---------
        Net income from discontinued
          operations                               --           --          770
                                            ---------    ---------    ---------
        Net income                          $  13,712    $   9,859    $   9,233
                                            =========    =========    =========
Basic earnings per share:
   Income from continuing operations        $    0.98    $    0.71    $    0.57
   Income from discontinued operations             --           --         0.05
                                            ---------    ---------    ---------
      Net income                            $    0.98    $    0.71    $    0.62
                                            =========    =========    =========
Diluted earnings per share:
   Income from continuing operations        $    0.94    $    0.70    $    0.56
   Income from discontinued operations             --           --         0.05
                                            ---------    ---------    ---------
      Net income                            $    0.94    $    0.70    $    0.61
                                            =========    =========    =========
Weighted average common shares
   Outstanding:
      Basic                                    14,010       13,911       14,827
                                            =========    =========    =========
      Diluted                                  14,537       14,179       15,068
                                            =========    =========    =========

           See accompanying notes to consolidated financial statements


                                       40
<PAGE>

                                  ANAREN, INC.
    Consolidated Statements of Stockholders' Equity and Comprehensive Income
                    Years ended June 30, 2010, 2009 and 2008
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                               Accumulated
                                                 Comprehensive Common   Additional               Other                     Total
                                                    Income     Stock     Paid-in     Retained Comprehensive  Treasury  Stockholders'
                                                    (loss)     Amount    Capital     Earnings    (Loss)       Stock       Equity
                                                 ------------- ------   ----------   -------- ------------- ---------- -------------
<S>                                               <C>          <C>      <C>          <C>        <C>         <C>          <C>
Balance at June 30, 2007                                       $  271   $ 187,878    $ 85,307   $   (985)   $(105,677)   $ 166,794
Comprehensive income:
  Net income                                       $  9,233        --          --       9,233         --           --        9,233
  Other comprehensive loss:
    Foreign currency translation adjustment           1,005        --          --          --         --           --           --
    Minimum pension liability adjustment,
       net of tax of $92                               (179)       --          --          --         --           --           --
                                                   --------
    Mark to market available-for-sale investments      (185)       --          --          --         --           --           --
                                                   --------
Other comprehensive income                              641        --          --          --        641           --          641
                                                   ========
               Total comprehensive income          $  9,874
Purchase of treasury stock (2,028 shares)                          --          --          --         --      (30,243)     (30,243)
Exercise of stock options under the equity plans                    3         663          --         --           --          666
Tax benefit from exercise of stock options                         --         119          --         --           --          119
Equity based compensation                                          --       3,654          --         --           --        3,654
                                                               ------   ---------    --------   --------    ---------    ---------
Balance at June 30, 2008                                       $  274   $ 192,314    $ 94,540   $   (344)   $(135,920)   $ 150,864
Comprehensive income:
  Net income                                       $  9,859        --          --       9,859         --           --        9,859
  Other comprehensive loss:
    Foreign currency translation adjustment              34        --          --          --         --           --           --
    Minimum pension liability adjustment,
       net of tax of $970                            (1,883)       --          --          --         --           --           --
    Mark to market available-for-sale investments      (204)       --          --          --         --           --           --
                                                   --------
Other comprehensive loss                             (2,053)       --          --          --     (2,053)          --       (2,053)
                                                   --------
               Total comprehensive income          $  7,806
                                                   ========
Purchase of treasury stock (471 shares)                            --          --          --         --       (5,014)      (5,014)
Exercise of stock options under the equity plans                    3       3,074          --         --           --        3,077
Issuance of restricted stock                                        3          (3)                                              --
Tax benefit from exercise of stock options                         --         200          --         --           --          200
Equity based compensation                                          --       4,012          --         --           --        4,012
                                                               ------   ---------    --------   --------    ---------    ---------
Balance at June 30, 2009                                       $  280   $ 199,597    $104,399   $ (2,397)   $(140,934)   $ 160,945
Comprehensive income:
  Net income                                       $ 13,712        --          --      13,712         --           --       13,712
  Other comprehensive loss:
    Foreign currency translation adjustment              62        --          --          --         --           --           --
    Minimum pension liability adjustment,
       net of tax of $247                              (478)       --          --          --         --           --           --
                                                   --------
Other comprehensive loss                               (416)       --          --          --       (416)          --         (416)
                                                   --------
               Total comprehensive income          $ 13,296
                                                   ========
Purchase of treasury stock (560 shares)                            --          --          --         --       (7,916)      (7,916)
Exercise of stock options under the equity plans                    2       2,725          --         --           --        2,727
Issuance of restricted stock                                        3          (3)                                              --
Tax benefit from exercise of stock options                         --         144          --         --           --          144
Equity based compensation                                          --       3,730          --         --           --        3,730
                                                               ------   ---------    --------   --------    ---------    ---------
Balance at June 30, 2010                                       $  285   $ 206,193    $118,111   $ (2,813)   $(148,850)   $ 172,926
                                                               ======   =========    ========   ========    =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       41
<PAGE>

                                  ANAREN, INC.
                      Consolidated Statements of Cash Flows
                    Years ended June 30, 2010, 2009 and 2008
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                          2010         2009        2008
---------------------------------------------------------------------------------------------------------
<S>                                                                      <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                         $ 13,712    $  9,859    $  9,233
      Net income from discontinued operations                                  --          --         770
                                                                         --------    --------    --------
         Net income from continuing operations                             13,712       9,859       8,463
      Adjustments to reconcile net income from continuing
      operations to net cash provided by operating activities:
      Depreciation                                                          8,716       8,400       6,764
      Loss on disposal of fixed assets                                        262          64         152
      Amortization                                                          1,471       1,425         605
      Deferred income taxes                                                (1,582)       (352)       (936)
      Equity based compensation                                             3,775       4,027       3,676

      Changes in operating assets and liabilities:
         Receivables                                                       (4,658)      5,056      (3,177)
         Inventories                                                        3,876       2,818      (2,671)
         Prepaid expenses and other current assets                           (325)       (474)        230
         Accounts payable                                                   2,279      (2,802)     (1,594)
         Accrued expenses                                                     454       1,646      (1,327)
         Customer advance payments                                            770      (1,381)        (60)
         Other liabilities                                                   (510)     (2,157)      1,740
         Pension and postretirement benefit obligation                       (139)      2,268          90
                                                                         --------    --------    --------
           Net cash provided by operating activities                       28,101      28,397      11,955
                                                                         --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                                 (4,841)     (6,831)    (12,383)
      Escrow claim received (payments made) related to the M.S.
         Kennedy and Unicircuit acquisitions, net of cash acquired            154     (48,166)
      Proceeds from sale of property, plant, and equipment                     50          --          --
      Maturities of held to maturity and available-for-sale
         securities                                                        12,755      22,459      64,831
      Purchases of held to maturity and available-for-sale
         securities                                                       (21,236)     (3,130)    (32,324)
                                                                         --------    --------    --------
           Net cash provided by (used in) investing activities            (13,118)    (35,668)     20,124
                                                                         --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Payments on mortgage payable                                             --      (1,209)         --
      Proceeds from (payments on) note payable                             (9,800)     49,800          --
      Stock options exercised                                               3,163       2,641         666
      Excess tax benefit from exercise of stock options                       144         200         118
      Purchase of treasury stock                                           (7,916)     (5,014)    (30,243)
                                                                         --------    --------    --------

           Net cash provided by (used in) financing activities            (14,409)     46,418     (29,459)
                                                                         --------    --------    --------
Effect of exchange rates on cash                                               54          35         179
                                                                         --------    --------    --------
           Net increase in cash and cash equivalents                          628      39,182       2,799
Cash and cash equivalents, beginning of year                               49,893      10,711       7,912
                                                                         --------    --------    --------
Cash and cash equivalents, end of year                                   $ 50,521    $ 49,893    $ 10,711
                                                                         ========    ========    ========
</TABLE>

           See accompanying notes to consolidated financial statements


                                       42
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

(1) Summary of Significant Accounting Policies:

(a) Principles of Consolidation

The consolidated financial statements include the accounts of Anaren, Inc. and
its wholly owned subsidiaries (the Company). Intercompany accounts and
transactions have been eliminated.

(b) Operations

The Company is engaged in the design, development, and manufacture of microwave
and RF components, assemblies, and subsystems which receive, process, and
transmit radar, wireless communications, and other wireless signals and other
microwave transmissions. The Company is also a leading provider of high
performance analog microelectronics including custom hybrids, power hybrids, and
multi-chip modules. Its primary products include devices and systems used in the
wireless communications, satellite communications, and defense electronics
markets.

(c) Revenue Recognition

Net sales are derived from sales of the Company's products to other
manufacturers or systems integrators. Net sales are recognized when there is a
persuasive evidence of an arrangement, delivery has occurred, the selling price
is fixed or determinable, and collectability is reasonably assured which
generally occurs when units are shipped.

Net sales under certain long-term contracts of the Space & Defense Group, many
of which provide for periodic payments, are recognized under the
percentage-of-completion method. Estimated manufacturing cost-at-completion for
these contracts are reviewed on a routine periodic basis, and adjustments are
made periodically to the estimated cost-at-completion, based on actual costs
incurred, progress made, and estimates of the costs required to complete the
contractual requirements. When the estimated manufacturing cost-at-completion
exceeds the contract value, the contract is written down to its net realizable
value, and the loss resulting from cost overruns is immediately recognized.

To properly match net sales with costs, certain contracts may have revenue
recognized in excess of billings (unbilled revenues), and other contracts may
have billings in excess of net sales recognized (billings in excess of contract
costs). Under long-term contracts, the prerequisites for billing the customer
for periodic payments generally involve the Company's achievement of
contractually specific, objective milestones (e.g., completion of design,
testing, or other engineering phase, delivery of test data or other
documentation, or delivery of an engineering model or flight hardware). The
amount of unbilled accounts receivable at June 30, 2010 and 2009 is $0.7 million
and $0.5 million, respectively.

An award or incentive fee is usually variable, based upon specific performance
criteria stated in the contract. Award or incentive fees are recognized only
upon achieving the contractual criteria and after the customer has approved or
granted the award or incentive.

The allowance for sales returns is the Company's best estimate of probable
customer credits for returns of previously shipped products, and is based on
historical rates of returns by customers.

(d) Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand and short-term cash investments
that are highly liquid in nature and have original maturities of three months or
less at the date acquired.

(e) Marketable Securities

The Company classifies its securities as either available-for-sale or held to
maturity, as the Company does not hold any securities considered to be trading.
Held to maturity securities are those debt securities for which the Company has
the positive intent and the ability to hold until maturity. All other securities
not included in held to maturity are classified as available-for-sale.
Management determines the appropriate classification of securities at the time
of purchase and reevaluates such designation as of each balance sheet date.

Held to maturity securities are recorded at amortized cost adjusted for the
amortization or accretion of premiums or discounts. Available-for-sale
securities are recorded at fair value. Unrealized holding gains and losses, net
of the related tax effect, on available-for-sale securities are excluded from
earnings and are reported as accumulated other comprehensive income or loss
until realized.

The Company invests its excess cash principally in municipal bonds, commercial
paper, corporate bonds and notes, and U.S. government agency securities. The
Company also has an investment in an auction rate security. The auction rate
security has a long-term underlying maturity, and the interest rate resets every
365 days.


                                       43
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

A decline in the fair value of any available-for-sale or held to maturity
security, that is deemed other than temporary, is charged to earnings resulting
in the establishment of a new cost basis for the security, and dividend and
interest income are recognized when earned. The Company records their
available-for-sale securities at market value through accumulated other
comprehensive income. The reduction in market value of the available-for-sale
securities at June 30, 2010 and 2009 is $0.4 million and $0.4 million,
respectively.

(f) Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is the Company's best estimate of
the amount of probable credit losses in the Company's existing accounts
receivable. The Company reviews its allowance for doubtful accounts monthly by
reviewing balances over 90 days for collectibility. Account balances are charged
off against the allowance after all means of collection have been exhausted and
the potential for recovery is considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers.

(g) Inventories

Inventories are stated at the lower of cost or market, cost being determined on
a first-in, first-out basis. We record a provision for estimated obsolescence of
inventory. Our estimates consider the cost of inventory, forecasted demand, the
estimated market value, the shelf life of the inventory and our historical
experience. Because of the subjective nature of this estimate, it is reasonably
likely that circumstances may cause the estimate to change due to any of the
factors described previously.

(h) Warranty

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

                    (amounts in thousands)
                    Balance as of July 1, 2009         $ 434
                    Additions                            440
                    Costs incurred                      (450)
                    Adjustments                         (104)
                                                       -----
                    Balance as of June 30, 2010        $ 320
                                                       =====

(i) 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 25-30 years. Machinery and equipment, and furniture
and fixtures are depreciated by the straight-line method based on estimated
useful lives of 5 to 10 years. Leasehold improvements are depreciated over the
remaining lives of the improvements or the lease term, whichever is shorter.

(j) Goodwill and Tradenames

Goodwill represents the excess of purchase price over the fair value of the net
tangible assets and identifiable intangible assets of businesses acquired.
Tradenames represent the estimated fair value of corporate and product names
acquired from the MSK and Unicircuit acquisitions, which will be utilized by the
Company in the future.

Goodwill and tradenames are tested annually for impairment at the reporting unit
level in the fourth quarter, using March 31, 2010 as the test date, of the
Company's fiscal year, or more frequently if there is an indication of an
impairment, by comparing the fair value of the reporting unit with its carrying
value. Valuation methods for determining the fair value of the reporting unit
include reviewing quoted market prices and discounted cash flows. If the
goodwill is indicated as being impaired, the fair value of the reporting unit is
then allocated to its assets and liabilities in a manner similar to a purchase
price allocation in order to determine the implied fair value of the reporting
unit goodwill. This implied fair value of the reporting unit goodwill is then
compared with the carrying amount of the reporting unit goodwill, and if it is
less, the Company would then recognize an impairment loss. During 2010, 2009 and
2008, the Company did not record any impairments on its goodwill; and did not
record any impairments on tradenames during fiscal 2010 and 2009.

                                       44
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

(k) Long-Lived Assets

The Company accounts for impairment and disposal of long-lived assets, excluding
goodwill and tradenames, in accordance with the accounting rules relating to the
impairment or disposal of long-lived assets. The rules set forth criteria to
determine when a long-lived asset is held for sale and held for use. Such
criteria specify that the asset must be available for immediate sale in its
present condition subject only to terms that are usual and customary for sales
of such assets. In addition, the sale of the asset must be probable, and its
transfer expected to qualify for recognition as a completed sale, generally
within one year. The rules require recognition of an impairment loss if the
carrying amount of a long-lived asset is not recoverable from its undiscounted
cash flows. An impairment loss is measured as the difference between the
carrying amount and fair value of the asset. The Company evaluates its
long-lived assets if impairment indicators arise. During 2010, 2009 and 2008,
the Company did not record any impairment on its long-lived assets.

(l) Foreign Currency Translation

The financial statements of the Company's subsidiary in China have been
translated into U.S. dollars in accordance with the foreign currency translation
accounting rules. All balance sheet accounts have been translated using the
exchange rates in effect at the balance sheet date. Income statement amounts
have been translated using the average exchange rate for the year. The resulting
cumulative translation adjustment of approximately $1.5 million and $1.4 million
at June 30, 2010 and 2009, respectively, is reflected as accumulated other
comprehensive income, a component of stockholders' equity.

(m) Earnings Per Share

Basic earnings per share is based on the weighted average number of common
shares outstanding. Diluted earnings per share is based on the weighted average
number of common shares outstanding, as well as dilutive potential common shares
which, in the Company's case, comprise shares issuable under the stock option
and restricted stock plans. The weighted average number of common shares
utilized in the calculation of the diluted earnings per share does not include
antidilutive shares aggregating 1,071,000, 792,000, and 1,682,000 at June 30,
2010, 2009, and 2008, respectively. The treasury stock method is used to
calculate dilutive shares which reduces the gross number of dilutive shares by
the number of shares purchasable from the proceeds of the options assumed to be
exercised.

The following table sets forth the computation of basic and diluted shares for
use in the calculation of earnings per share as of June 30:

                                                        For the Years Ended
                                                     ---------------------------
                                                      2010       2009     2008
                                                     -------   -------   -------
(amounts in thousands)
Numerator:
Earnings available to common stockholders            $13,712   $ 9,859   $ 9,233
                                                     =======   =======   =======
Denominator:
Denominator for basic earnings per share
outstanding                                           14,010    13,911    14,827
                                                     =======   =======   =======
Denominator for diluted earnings per share:
   Weighted average shares outstanding                14,010    13,911    14,827
Common stock options and restricted stock                527       268       241
                                                     -------   -------   -------
Weighted average shares                               14,537    14,179    15,068
                                                     =======   =======   =======

(n) Equity Based Compensation

Option grants were valued using a Black-Scholes option valuation model. The
assumptions include the risk-free rate of interest, expected dividend yield,
expected volatility, and the expected term of the award. The risk-free rate of
interest was based on the zero coupon U.S. Treasury bond rates appropriate for
the expected term of the award. There are no expected dividends as the Company
does not currently plan to pay dividends on its common stock. Expected stock
price volatility was based on historical volatility levels of the Company's
common stock. The expected term is estimated by using the actual contractual
term of the awards and the expected length of time for the employees to exercise
the awards.

(o) Research and Development Costs

Research and development costs are expensed as incurred. These costs are costs
of salaries, support, benefits, and materials used in the research and
development of new products or processes.


                                       45
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

(p) 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. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

The Company applies the accounting standards as it relates to accounting for
uncertainty in income taxes which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements. The accounting
rules prescribe a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken on a tax return.

(q) Cash Flow Supplemental Disclosure

                                                        For the Years Ended
                                                     ---------------------------
                                                      2010      2009       2008
                                                     ------   --------    ------
(amounts in thousands)
Cash paid during the year for:
   Interest                                          $  711   $  1,204    $   25
                                                     ------   --------    ------
   Taxes paid (net of refunds)                        6,145      3,470     3,319
                                                     ------   --------    ------
Fixed asset purchases included in accounts               --         --       581
payable

     Fair value of assets acquired, including
        cash acquired                                $   --   $ 59,884    $   --
     Less - liabilities assumed                          --     (8,832)       --
                                                     ------   --------    ------
     Net assets acquired                                 --     51,052        --
     Less - acquisition costs from fiscal 2008           --       (330)       --
     Less - cash acquired                                --     (2,556)       --
                                                     ------   --------    ------
     Net cash paid for purchases of businesses       $   --   $ 48,166    $   --
                                                     ------   --------    ------

(r) Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.
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.
Significant estimates or assumptions are made in assessing the Company's
accounts receivable allowances, inventory reserves, warranty liability, pension
and postretirement liabilities, and valuations of tangible assets, intangible
assets, and auction rate security.


                                       46
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

(s) Recent Accounting Pronouncements

In October 2009, new accounting guidance was issued related to the accounting
for revenue recognition from arrangement with multiple deliverables. This
guidance removes the "objective-and-reliable-evidence-of-fair-value" criterion
from the separation criteria used to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting, replaces
references to "fair value" with "selling price" to distinguish from the fair
value measurements required under the "Fair Value Measurements and Disclosures"
guidance, provides a hierarchy that entities must use to estimate the selling
price, eliminates the use of the residual method for allocation, and expands the
ongoing disclosure requirements. This update is effective for the Company
beginning July 1, 2011 and can be applied prospectively or retrospectively.
Management is currently evaluating the effect that adoption of this update will
have, if any, on the Company's consolidated financial statements when it becomes
effective in 2012.

(2) Acquisitions

In the first quarter of fiscal 2009, the Company acquired M.S. Kennedy Corp.
(MSK) and Unicircuit Inc. (Unicircuit) accordance with the purchase method of
accounting, the acquired net assets are recorded at estimated fair value at the
date of acquisition. The purchase price was based primarily on the estimated
future operating results of the two companies.

The following table summarizes the fair values of the combined assets acquired
and liabilities assumed in the two acquisitions:

 (amounts in thousands)
Current assets                                                           $20,328
Property, plant and equipment                                             12,838
Goodwill                                                                  11,961
Intangible assets                                                         12,420
Other assets                                                               2,337
                                                                         -------
      Total assets acquired                                              $59,884

Current liabilities                                                      $ 4,825
Long-term liabilities                                                      4,007
                                                                         -------
   Total liabilities assumed                                               8,832
                                                                         -------

Net assets acquired                                                      $51,052
                                                                         =======

The following table sets forth the unaudited pro forma results of operations of
the Company for the years ended June 30, 2009 and 2008, as if the MSK and the
Unicircuit acquisition transactions occurred at the beginning of each fiscal
year.

                                                              For the Year
                                                             Ended June 30,
                                                               (unaudited)
(in thousands, except per share amounts)                    2009          2008
                                                          --------      --------
Net sales                                                 $171,358      $173,790
Income from continuing operations before
   income tax expense                                     $ 16,250      $ 16,364
Net income                                                $ 12,027      $ 11,125

Earnings per share:
   Basic                                                  $    .86      $    .75
   Diluted                                                $    .85      $    .74

Weighted average common shares outstanding:
   Basic                                                    13,911        14,827
   Diluted                                                  14,179        15,068


                                       47
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

The pro forma results are presented for illustrative purposes only and do not
include inventory step-up expenses for the year ended June 30, 2009; and do not
include certain inventory adjustments made by the acquired companies as part of
the acquisition process (approximately $1.5 million) for the year ended June 30,
2008. Although certain cost savings have resulted from the acquisition
transactions, there can be no assurance that additional cost savings will be
achieved. These pro forma results do not purport to be indicative of the results
that would have actually been obtained if the acquisition transactions had
occurred as of the dates indicated, nor do the pro forma results intend to be a
projection of results that may be obtained in the future.

(3) Intangible Assets

The major components of intangible assets are as follows:

                                              June 30, 2010      June 30, 2009
                                             Gross      Net     Gross      Net
                                           Carrying  Carrying  Carrying Carrying
(amounts in thousands)                       Amount   Amount    Amount   Amount
                                           --------  --------  -------  -------
Amortizable intangible assets:
   Customer relationships (10 years)        $ 7,530   $ 6,099   $7,530  $ 6,852
   Developed technology (5 years)               780       481      780      637
   Non-competition agreements (4 years)       1,130       593    1,130      875
                                            -------   -------   ------   ------
      Total                                 $ 9,440     7,173   $9,440    8,364

Nonamortizable intangible assets:
   Tradenames                                           2,980             2,980
                                                      -------           -------
      Total                                             2,980             2,980
                                                      -------           -------
Total intangible assets                               $10,153           $11,344
                                                      =======           =======

Intangible asset amortization expense for the years ended June 30, 2010, 2009
and 2008 aggregated $1.2 million and $1.1 million, and $0, respectively.
Amortization expense related to developed technology is recorded in cost of
sales, and amortization expense for non-compete agreements and customer
relationships is recorded in general and administrative expense.


                                       48
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

The following table represents the amortization expense for each of the five
succeeding fiscal years and thereafter is as follows:

(amounts in thousands)
2011                                                                      $1,192
2012                                                                      $1,192
2013                                                                      $  937
2014                                                                      $  766
2015                                                                      $  753
Thereafter                                                                $2,333

The changes in the carrying amount of goodwill for the years ended June 30, 2010
and 2009, are as follows:

(amounts in thousands)
Balance, June 30, 2009                                                  $42,635
Purchase price adjustment received from escrow                             (154)
Tax adjustment resulting from acquisition                                   (46)
                                                                       --------
Balance, June 30, 2010                                                  $42,435
                                                                       --------

(4)  Securities

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

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

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

<CAPTION>
                                                              June 30, 2009
---------------------------------------------------------------------------------------------
                                                            Gross        Gross
                                              Amortized  unrealized   unrealized
(amounts in thousands)                           cost       gains        losses    Fair value
---------------------------------------------------------------------------------------------
<S>                                            <C>           <C>          <C>        <C>
Securities available-for-sale:
   Auction rate securities                     $ 1,440       $ --         $(389)     $ 1,051

Securities held to maturity:
   Municipal bonds                             $13,889       $310         $  --      $14,199
   Corporate bonds                                  --         --            --           --
   Federal agency bonds                             --         --            --           --
                                               -------       ----         -----      -------
     Total securities held to maturity         $13,889       $310         $  --      $14,199
                                               =======       ====         =====      =======
</TABLE>


                                       49
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

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

                                            2010                    2009
                                     -------------------------------------------
                                                  Fair                     Fair
                                                 market                   market
                                      Cost        value       Cost        value
                                     -------------------------------------------
(amounts in thousands)
 Within one year                     $ 2,334     $ 2,379     $11,810     $12,075
 One year to three years              19,756      20,075       2,079       2,124
                                     -------     -------     -------     -------
    Total                            $22,090     $22,454     $13,889     $14,199
                                     =======     =======     =======     =======

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

                                            2010                    2009
                                     -------------------------------------------
                                                  Fair                     Fair
                                                 market                   market
                                      Cost        value       Cost        value
                                     -------------------------------------------
(amounts in thousands)
One year to five years                $1,440      $1,051      $1,440      $1,051

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

(5)  Fair Value Measurements

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

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

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

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

                                                                 Total Carrying
                                                                     Value at
(amounts in thousands)          Level 1    Level 2    Level 3     June 30, 2010
--------------------------------------------------------------------------------

Cash equivalents                  $5,807     $--       $   --         $5,807

Available-for-sale securities         --      --        1,051          1,051


                                       50
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Valuation Techniques

The Level 3 security, noted in the table above, has an estimated cost value of
$1.4 million. As of June 30, 2010 and June 30, 2009, this security was valued at
$1.1 million. The Company's available-for-sale security is a debt security that
is traded in an inactive market. After analyzing the underlying assets and
structure of the student loan auction rate security, the Company has determined
that the most appropriate method of deriving a value indication was a discounted
cash flow analysis. The Company found that collateral characteristics,
redemption probability, credit rating, and discount rates are the most important
value drivers to determine an estimated fair value of the underlying security,
and is classified within Level 3 of the valuation hierarchy.

(6) Inventories

Inventories at June 30 are summarized as follows:

(amounts in thousands)                                   2010            2009
                                                       --------        --------
Raw Materials                                          $ 17,319        $ 18,533
Work in process                                           9,396          12,664
Finished goods                                            4,646           4,085
                                                       --------        --------
                                                       $ 31,361        $ 35,282
                                                       ========        ========

(7) Property, Plant, and Equipment

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

(amounts in thousands)                                   2010            2009
                                                       --------        --------
Land and land improvements                             $  5,167        $  5,260
Construction in process                                   1,451             964
Buildings, furniture, and fixtures                       34,052          33,872
Machinery and equipment                                  62,267          58,865
                                                       --------        --------
                                                        102,937          98,961
Less accumulated depreciation                           (54,226)        (46,072)
                                                       --------        --------
                                                       $ 48,711        $ 52,889
                                                       ========        ========

(8)  Debt

The following table summarizes the long-term debt of the Company as of June 30,
2010 and June 30, 2009:


                                                       June 30,        June 30,
                                                         2010            2009
                                                       --------        --------
(amounts in thousands)
Revolving credit note                                  $ 40,000        $ 49,800
Less current maturities                                 (10,000)         (9,800)
                                                       --------        --------
Long-term debt, less current maturities                $ 30,000        $ 40,000
                                                       ========        ========

The following table summarizes the payments to be made on the long-term debt of
the Company for the next five years:

(amounts in thousands)
2011                                                                     $10,000
2012                                                                     $10,000
2013                                                                     $10,000
2014                                                                     $10,000


                                       51
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

The Company's current and long term debt consists of a loan agreement with
Keybank National Association. The loan agreement consists of a $50 million
revolving credit note ("Note"), for which principal amounts are due on August 1,
2009, and on each anniversary date thereafter through July 31, 2013 in
accordance with the above schedule. The company made a payment of $10 million in
July 2010. Availability of credit under the Note declines 20% annually on each
anniversary date and any outstanding principal balance in excess of the credit
availability is due and payable at that time. The Company's indebtedness and
obligations are guaranteed by three of the Company's domestic subsidiaries, as
well as, an assignment of the Company's interest in its foreign subsidiary.

Borrowings under the Note, at the Company's choice, bear interest at LIBOR, plus
100 to 425 basis points, or at Keybank prime rate, minus (100) to plus 225 basis
points, depending upon the Company's EBITDA performance at the end of each
quarter as measured by the formula: EBITDA divided by the Current Portion of
Long-term Debt plus interest expense. For the years ended June 30, 2010 and
2009, the weighted average interest rate on the outstanding borrowings was
approximately 1.4% and 3.2%, respectively.

Borrowings under the Agreement are subject to operating covenants. The Company
was in compliance with covenants as of June 30, 2010 and 2009.


(9) Accrued Expenses

Accrued expenses at June 30 consist of the following:

(amounts in thousands)                                   2010            2009
                                                       --------        --------
Compensation                                           $  4,483        $  3,638
Commissions                                                 730             760
Health insurance                                            423             685
Other                                                        25             125
                                                       --------        --------
                                                       $  5,661        $  5,208
                                                       ========        ========

(10) Other Liabilities

Other liabilities as of June 30 consist of the following:

(amounts in thousands)                                   2010            2009
                                                       --------        --------
Deferred compensation                                  $    425        $    243
Supplemental retirement plan                                670             584
Accrued lease                                             1,107           1,184
Warranty accrual                                            320             434
Income tax liability                                      1,610           1,747
Deferred grant income                                       375             375
Interest                                                    131             350
Other                                                       155             300
                                                       --------        --------
                                                          4,793           5,217
Less current portion                                     (2,920)         (2,525)
                                                       --------        --------
                                                       $  1,873        $  2,692
                                                       ========        ========

The Company is currently paying to a former employee's beneficiary approximately
$0.1 million annually through 2020 (agreement extended 5 years in fiscal year
2010), or until the death of the employee's beneficiary.

(11) Stock-Based Compensation

The Company applies the fair-value recognition provisions of share-based payment
accounting. This requires the Company to measure the cost of employee services
received in exchange for equity awards based on the grant-date fair value of the
awards. The cost is recognized as compensation expense on a straight-line basis
over the requisite service period of the awards.


                                       52
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Total stock-based compensation expense recognized for the years ended June 30,
2010, 2009, and 2008, broken out by operating expense category, is as follows
for the year ended:

<TABLE>
<CAPTION>
                                                                   June 30, 2010
                                                       Stock         Restricted          Total
                                                      option            stock         stock-based
(amounts in thousands)                                program          program       compensation
                                                      -------        ----------      ------------
<S>                                                   <C>               <C>             <C>
Cost of goods sold                                    $   203           $  368          $  571
Marketing                                                  83              150             233
Research and development                                  236              428             664
General and administrative                                318            1,944           2,262
                                                      -------           ------          ------
     Total cost of stock-based compensation               840            2,890           3,730
Amounts expensed out of inventory for the year             16               29              45
                                                      -------           ------          ------
Net stock-based compensation expense                  $   856           $2,919          $3,775
                                                      =======           ======          ======
Amount of related income tax benefit
  recognized in income                                $   308           $1,051          $1,359
                                                      =======           ======          ======

<CAPTION>
                                                                   June 30, 2009
                                                       Stock         Restricted          Total
                                                      option            stock         stock-based
(amounts in thousands)                                program          program       compensation
                                                      -------        ----------      ------------
<S>                                                   <C>               <C>             <C>
Cost of goods sold                                    $   503           $  388          $  891
Marketing                                                 157              133             290
Research and development                                  321              248             569
General and administrative                                726            1,536           2,262
                                                      -------           ------          ------
     Total cost of stock-based compensation             1,707            2,305           4,012
Amounts expensed out of inventory for the year              9                6              15
                                                      -------           ------          ------
Net stock-based compensation expense                  $ 1,716           $2,311          $4,027
                                                      =======           ======          ======
Amount of related income tax benefit
  recognized in income                                $   381           $1,211          $1,592
                                                      =======           ======          ======

<CAPTION>
                                                                   June 30, 2008
                                                       Stock         Restricted          Total
                                                      option            stock         stock-based
(amounts in thousands)                                program          program       compensation
                                                      -------        ----------      ------------
<S>                                                   <C>               <C>             <C>
Cost of goods sold                                    $   527           $  298          $  825
Marketing                                                 179               49             228
Research and development                                  377              213             590
General and administrative                              1,229              782           2,011
                                                      -------           ------          ------
     Total cost of stock-based compensation             2,312            1,342           3,654
Amounts expensed out of inventory for the year             14                8              22
                                                      -------           ------          ------
Net stock-based compensation expense                  $ 2,326           $1,350          $3,676
                                                      =======           ======          ======
Amount of related income tax benefit
  recognized in income                                $   453           $  486          $  939
                                                      =======           ======          ======
</TABLE>


                                       53
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Stock Option Plans

In November 2004, the shareholders approved the amendment and restatement of the
Company's three existing stock option plans, which combined these plans under
one single consolidated equity compensation plan, the Anaren, Inc. Comprehensive
Long-Term Incentive Plan. The effect of the amendment and restatement was to
combine the separate share pools available for grant under the three existing
plans into a single grant pool, expand the type of equity-based awards the
Company may grant, and extend the term of the combined plan to October 31, 2014.
Under the restated plan, the Company may issue incentive stock options,
nonstatutory stock options, stock appreciation rights, restricted stock,
performance shares, and performance units that can vest immediately or up to
five years. Under this plan, the Company reserved 1,326,000 new common shares
available for grant. On June 30, 2010, the Company had 420,000 shares available
for grant under the restated plan.

Information with respect to this plan is as follows:

<TABLE>
<CAPTION>
                                                                                Weighted
                                             Total          Option               average
(in thousands, except per share amounts)     shares          price           exercise price
                                             ------    ----------------      --------------
<S>                                          <C>       <C>                      <C>
Outstanding at June 30, 2008                  2,249     $ 5.73 to 53.00          $16.91
   Issued                                        --                  --              --
   Exercised                                   (264)      5.73 to 15.00           11.93
   Expired                                      (98)      9.51 to 56.13           18.33
   Forfeited                                    (18)     12.05 to 19.56           16.11
                                              -----
Outstanding at June 30, 2009                  1,869       9.51 to 53.00           17.45
                                              =====
   Issued                                        --                  --              --
   Exercised                                   (219)      9.51 to 15.00           12.44
   Expired                                      (15)     12.05 to 53.00           23.15
   Forfeited                                     (1)     11.97 to 19.56           16.52
                                              -----
Outstanding at June 30, 2010                  1,634       9.51 to 53.00           18.84
                                              =====
                                              -----
Shares exercisable at June 30, 2010           1,524     $ 9.51 to 53.00          $18.16
                                              =====
</TABLE>

The following table summarizes significant ranges of outstanding and exercisable
options at June 30, 2010 (in thousands, except per share amounts):

           Options outstanding                               Options exercisable
-------------------------------------------------------      -------------------
                               Weighted        Weighted                 Weighted
    Range of                   average         Average                  average
    exercise                  remaining        Exercise                 exercise
     prices      Shares     life in years       price        Shares      price
--------------   ------     -------------      --------      ------     --------
$9.51 - $15.00    1,177          3.7           $14.23         1,122       $13.13
 15.01 - 20.00      291          3.9            19.40           236        19.28
 20.01 - 53.00      166          0.7            50.54           166        50.54
                  -----                                       -----
                  1,634                                       1,524
                  =====                                       =====

There were no grants made during the years ended June 30, 2010, 2009 and 2008
under this plan.


                                       54
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Nonvested Shares Issued Under the Plan
                                                     Number
                                                       of       Weighted-average
(amounts in thousands)                               shares        share price
                                                    --------    ----------------
Nonvested at June 30, 2009                               273        $  15.69
Granted                                                   --              --
Forfeited                                                 (1)          16.52
Vested                                                  (162)          14.94
                                                    --------        --------
Nonvested at June 30, 2010                               110        $  16.78
                                                    ========        ========

As of June 30, 2010 and 2009, there were 1,634,000 and 1,869,000 stock options
outstanding, respectively. At June 30, 2010, the aggregate value of unvested
options, as determined on respective grant dates using a Black-Scholes option
valuation model, was $0.4 million (net of estimated forfeitures), all of which
is expected to be recognized as compensation expense in fiscal year 2011. The
aggregate intrinsic value of both vested and unvested options outstanding were
in an underwater position at June 30, 2010. As of June 30, 2010, 1,524,000 stock
options were exercisable.

Share activity and value for the years ending:

                                                                 June 30
(amounts in thousands)                                    2010     2009     2008
                                                          ----    ------    ----
Forfeited or expired options                              $ 16    $  110    $ 25
Exercised options                                          219       264      73
Aggregate intrinsic value of exercised options            $870    $1,068    $425

Restricted Stock Program

The following table summarizes the restricted stock issuances that have not yet
vested:

                                                                       Weighted
                                            Total         Share        average
(in thousands, except per share amounts)    shares        price      share price
----------------------------------------    ------  ---------------  -----------
Outstanding at June 30, 2008                 373    $12.06 to 21.15     $18.00
   Issued                                    360               9.09       9.09
   Vested                                    (12)             16.27      16.27
   Forfeited                                 (11)     9.09 to 19.56      13.96
                                             ---
Outstanding at June 30, 2009                 710     $9.09 to 21.15     $13.56
                                             ===
   Issued                                    282     14.28 to 16.32      14.32
   Vested                                    (91)     9.09 to 19.56      15.23
   Forfeited                                  (1)             19.56      19.56
                                             ---
Outstanding at June 30, 2010 *               900     $9.09 to 21.15     $13.64
                                             ===

* In fiscal 2006 and fiscal 2009, the Company issued restricted stock grants to
management, totaling approximately 120,000 and 14,000, respectively. Of the
shares issued, 124,000 are outstanding to participants as of June 30, 2010. The
per-share value of each grant was $21.15 and $9.09, respectively. These shares
are subject to a forfeiture period which expires as of the later of May 17, 2009
and the last day of the Company's single fiscal year during which the Company
has both net sales from operations of at least $250 million and operating income
of at least 12 percent of net sales. These grant agreements expire if both
financial performance conditions above are not met by June 30, 2011. Presently,
the Company has recognized no compensation expense for this grant and the shares
have not been included in the current diluted earnings per share calculation as
the Company believes that it is probable that these goals will not be met within
the time period specified. In the future, if it becomes probable that the sales
and earnings goals will be achieved, the compensation cost associated with the
grant will be immediately recognized for the period through the date it becomes
probable, and ratably over the remaining vesting period for the remainder of the
grant value.


                                       55
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

(12) Accumulated Other Comprehensive Income (Loss)

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

                                                        Mark to
                                Foreign     Minimum     Market      Accumulated
                               currency     pension    Available       other
                              translation  liability   for Sale   comprehensive
                               adjustment  adjustment  Securities  income (loss)
                              -----------  ----------  ---------- --------------
(amounts in thousands)
Balances at June 30, 2008        $1,370      $(1,529)    $(185)       $  (344)
Current period change                34       (1,883)     (204)        (2,053)
                                 ------      -------     -----        -------
Balances at June 30, 2009        $1,404      $(3,412)    $(389)       $(2,397)
                                 ------      -------     -----        -------
Current period change                62         (478)       --           (416)
                                 ------      -------     -----        -------
Balances at June 30, 2010        $1,466      $(3,890)    $(389)       $(2,813)
                                 ======      =======     =====        =======

(13) 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% or more of the outstanding shares of common stock. Rights held by
persons who exceed the 20% 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 $0.001 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.

(14) Employee Benefit Plans

The Company applies the standards governing employer's accounting for defined
benefit pension and other postretirement plans, which requires balance sheet
recognition of the overfunded or underfunded status of pension and
postretirement benefit plans. Under these rules, actuarial gains and losses,
prior service costs or credits, and any remaining transition assets or
obligations that have not been recognized under previous accounting standards
must be recognized in accumulated other comprehensive income, net of tax
effects, until they are amortized as a component of net periodic benefit cost.
In addition, the measurement date, the date at which plan assets and the benefit
obligation are measured, is required to be the company's fiscal year end.


                                       56
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Defined Benefit Plan

The Company has a noncontributory defined benefit pension plan covering eligible
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:

(amounts in thousands)                                     2010         2009
                                                         --------     --------
Change in benefit obligation:
  Benefit obligation at beginning of year                $ 13,004     $ 11,175
  Service cost                                                279          264
  Interest cost                                               791          760
  Actuarial (gain) loss                                     2,432        1,199
  Benefits paid                                              (398)        (395)
                                                         --------     --------
  Benefit obligation at end of year                      $ 16,108     $ 13,003
                                                         ========     ========
Change in plan assets:
  Fair value of plan assets at beginning of year         $  9,080     $ 10,223
  Actual return on plan assets                                860         (878)
  Employer contributions                                      868          130
  Benefits paid                                              (398)        (395)
                                                         --------     --------
  Fair value of plan assets at end of year               $ 10,410     $  9,080
                                                         ========     ========
  Unfunded status                                        $ (5,698)    $ (3,923)
                                                         ========     ========
Amounts Recognized in Accumulated Other Comprehensive
Income
  Net actuarial loss                                        4,659        3,319
Weighted average assumptions:
  Discount rate at year-end                                  5.30%        6.28%
  Rate of increase in compensation levels at year end        4.00%        4.00%
  Expected return on plan assets during the year             8.50%        8.50%
  Measurement date                                        June 30      June 30

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

<TABLE>
<CAPTION>
(amounts in thousands)                                     2010      2009      2008
                                                          -----     -----     -----
<S>                                                       <C>       <C>       <C>
Service cost                                              $ 279     $ 264     $ 273
Interest cost                                               791       760       705
Expected return on plan assets                             (762)     (849)     (918)
Amortization of unrecognized prior service cost              --        --        --
Amortization of unrecognized loss                           305       102        31
                                                          -----     -----     -----
Net periodic pension cost                                 $ 613     $ 277     $  91
                                                          =====     =====     =====
Weighted average assumptions:
   Discount rate                                           6.28%     6.85%     6.35%
   Expected increase in compensation levels at year end    4.00%     4.00%     4.00%
   Expected return on plan assets during the year          8.50%     8.50%     8.50%
</TABLE>

The estimated amount of net actuarial loss that will be amortized from
accumulated other comprehensive income into net periodic pension cost in 2011 is
$0.5 million.


                                       57
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Plan Assets

<TABLE>
<CAPTION>
                                                2010                       2009
                                       ------------------------   -----------------------
                                         Actual      Percentage     Actual     Percentage
                                       allocation    allocation   allocation   allocation
                                       ----------    ----------   ----------   ----------
<S>                                     <C>              <C>        <C>           <C>
(amounts in thousands)
Money market                            $   386          3.71%      $  454        5.00%
Common equities                               0          0.00          306        3.37
Corporate debt securities                 1,546         14.85        1,589       17.50
Government debt securities                2,375         22.82        2,693       29.66
Global equity mutual fund                   841          8.08          618        6.80
Closed end equity mutual funds            5,072         48.73        3,310       36.46
Closed end global equity mutual funds       189          1.81          110        1.21
                                        -------         ------      ------       ------
                                        $10,409         100.00%     $9,080       100.00%
                                        =======         ======      ======       ======
</TABLE>

Fair value of plan assets - Beginning in fiscal 2010, the rules related to
accounting for postretirement benefit plans under GAAP require certain fair
value disclosures related to postretirement benefit plan assets. The following
table presents the fair value of the assets by asset category and their level
within the fair value hierarchy as of June 30, 2010. See Note 5 for the
description of each level within the fair value hierarchy.

                                                                  Total Carrying
                                                                     Value at
(amounts in thousands)             Level 1    Level 2    Level 3   June 30, 2010
--------------------------------------------------------------------------------
Cash and cash equivalents:
        Money market               $   386   $     --   $     --   $   386
Fixed income:                           --
      Corporate debt securities      1,546         --         --     1,546
      Government debt securities     2,375         --         --     2,375
 Mutual funds:
      Global equity mutual fund        841         --         --       841
      Closed equity mutual fund      5,072         --         --     5,072
      Closed end global equity
      mutual fund                      189         --         --       189
                                   -------   --------   --------   -------
        Total                      $10,409   $     --   $     --   $10,409
                                   =======   ========   ========   =======

Plan's Investment Policy: Investments shall be made pursuant to the following
objectives: 1) preserve purchasing power of plan's assets base adjusted for
inflation; 2) provide long term growth; 3) avoid significant volatility. Asset
allocation shall be determined based on a long-term target allocation having 30%
of assets invested in Large-Cap domestic equities, 11% in mid-cap domestic
equities, 11% in small-cap domestic equities, 8% international equities, and 40%
in the broad bond market, with little or none invested in cash. Both investment
allocation and performance shall be reviewed periodically.


                                       58
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Determination of Assumed Rate of Return
The Corporation has selected the assumed rate of return based on the following:

                                                        Expected
                                                        compound        Expected
                                         Target        annualized       weighted
                                       percentage        5-year         average
                                       allocation    (index) return     return
                                       ----------    --------------    ---------
Large-cap stocks                          30.00%          9.50%          2.85%
Mid-cap stocks                            11.00          11.50           1.27
Small-cap stocks                          11.00          11.80           1.30
International common stocks                8.00           9.50           0.76
Broad bond market                         40.00           2.90           1.16
                                         ------                          ----
   Total                                 100.00%                         7.34%
                                         ======                          ====

The Company estimated investment expenses of approximately 0.5% of the portfolio
annually.

Expected Contributions

The Company had pension contributions amounting to approximately $0.9 million
during fiscal 2010. Expected contributions for fiscal 2011 are approximately
$0.2 million to $0.5 million.

Estimated Future Benefit Payments

(amounts in thousands)
The following estimated benefit payments, which reflect future service, as
appropriate, are expected to be paid:

July 1, 2010 - June 30, 2011 ................................             $  591
July 1, 2011 - June 30, 2012 ................................                633
July 1, 2012 - June 30, 2013 ................................                646
July 1, 2013 - June 30, 2014 ................................                675
July 1, 2014 - June 30, 2015 ................................                692
Years 2016 - 2020 ..........................................               4,056

Defined Contribution Plan

The Company maintains a voluntary contributory salary savings plan to which
participants may contribute. The Company's matching contribution is 100% of the
participants' contribution up to a maximum of 5% of the participants'
compensation. During fiscal 2010, 2009, and 2008 the Company contributed $1.6
million, $1.5 million, and $1.1 million, respectively, to this plan. The Company
also contributed approximately $0.2 million in fiscal 2010, and $0.1 million in
each of fiscal 2009 and 2008, to purchase Company's stock for each participant.

Profit Sharing 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 $0.7 million, $0.6 million, and $0.2 million in fiscal 2010,
2009, and 2008, respectively. While the Company intends to continue this plan,
it reserves the right to terminate or amend the plan at any time.


Postretirement Health Benefit Plan

The Company has a contributory postretirement health benefit plan covering
eligible employees. Effective August 15, 2000 the plan was closed for new
participants. 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


                                       59
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

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 27, 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:

(amounts in thousands)                                         2010       2009
                                                             -------    -------
Benefit obligation at beginning of year                      $ 2,573    $ 2,363
Service cost                                                      52         70
Interest cost                                                    110        157
Plan participants' contributions                                 124        134
Amendments                                                        --         --
Actuarial (gain) loss                                         (1,349)        14
Benefits paid                                                   (125)      (191)
Medicare Part D prescription drug subsidy                         --         26
                                                             -------    -------
Benefit obligation at the end of year                        $ 1,385    $ 2,573
                                                             =======    =======
Fair value of plan assets                                    $    --    $    --
Under funded status                                           (1,385)    (2,573)
                                                             -------    -------
  Accrued postretirement benefit cost                        $(1,385)   $(2,573)
                                                             =======    =======
Amounts Recognized in Accumulated Other Comprehensive
Income
  Net actuarial loss (income)                                $  (769)   $    93


Net periodic postretirement benefit cost includes the following components:

(amounts in thousands)                                   2010     2009     2008
                                                        -----    -----    -----
Service cost                                            $  52    $  70    $  69
Interest cost                                             110      157      144
Amortized loss                                            (27)       3       16
Amortization of unrecognized prior service cost           (18)     (18)     (18)
                                                        -----    -----    -----
   Net periodic postretirement benefit cost             $ 117    $ 212    $ 211
                                                        =====    =====    =====

The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 5.20%, 6.37%, and 6.86%, at the end of
fiscal 2010, 2009, and 2008, respectively.

Assumed health care cost trend rates are as follows:

                                                           2010          2009
                                                           ----          ----
Health care cost trend rate assumed for next year      7.3 - 10.0%   7.5 - 10.5%

Rate that the cost trend rate gradually declines to         5%            5%

Year that the rate reaches the rate it is assumed to       2017          2016
remain at

A one-percentage point change in assumed health care cost trend rates would have
the following effects:

                                                                 1%        1%
(amounts in thousands)                                        increase  decrease
                                                              --------  --------
Effect on total of service and interest cost components ....     $10     $ 9
Effect on postretirement benefit obligation ................      64      59
Estimated Future Benefit Payments


                                       60
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

Shown below are the expected gross benefit payments (including prescription drug
benefits) and the expected gross amount of subsidy receipts.

                                                          Gross       Subsidy
(amounts in thousands)                                  payments      receipts
                                                        --------      --------
2011                                                      $ 99         $(20)
2012                                                       110          (23)
2013                                                        97          (16)
2014                                                       104          (16)
2015                                                        98          (17)
Years 2016 - 2020                                          547          (79)

(15) Income Taxes

The following table presents the Domestic and Foreign components of income
before income taxes and discontinued operations and the expense (benefit) for
income taxes as well as the taxes charged or credited to stockholders' equity:

                                                        Year ended June 30
                                                -------------------------------
 (amounts in thousands)                           2010        2009        2008
                                                --------    --------    -------
Income before income taxes and
   discontinued operations:
       Domestic                                 $ 19,180    $ 12,075    $ 8,955
       Foreign                                      (618)      1,558      2,490
                                                --------    --------    -------
                                                $ 18,562    $ 13,633    $11,445
                                                ========    ========    =======
Income tax expense charged to the income
statement from continuing operations:
       Current:
         Federal                                $  5,848    $  4,218    $ 3,272
         State and local                             184        (204)       192
         Benefit applied to reduce goodwill           46          42         --
         Foreign                                     354          70        454
                                                --------    --------    -------
           Total current                           6,432       4,126      3,918
                                                --------    --------    -------
       Deferred:
         Federal                                    (921)       (544)      (813)
         State and local                            (271)        (74)       (43)
         Foreign                                    (390)        266        (80)
                                                --------    --------    -------
           Total deferred                         (1,582)       (352)      (936)
                                                --------    --------    -------
           Subtotal                                4,850       3,774      2,982
                                                --------    --------    -------
Income tax benefit recognized in the income
statement from discontinued operations:
         Income tax benefit                           --          --       (770)
                                                --------    --------    -------
           Total income taxes charged to the    $  4,850    $  3,774    $ 2,212
           income statement
                                                ========    ========    =======
Income taxes charged (credited) to
   shareholders' equity:
   Current benefit of stock based compensation  $   (144)       (200)      (119)
   Deferred tax benefit from recognition
     of pension liability                           (247)       (970)       (92)
                                                --------    --------    -------
         Income taxes credited to
           shareholders' equity                 $   (391)   $ (1,170)   $  (211)
                                                ========    ========    =======


                                       61
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

A reconciliation of the expected consolidated income tax expense, computed by
applying a 35% U.S. Federal corporate income tax rate to income before income
taxes and discontinued operations, to income tax expense, is as follows:

(amounts in thousands)                              2010       2009       2008
                                                  -------    -------    -------
Expected consolidated income tax expense          $ 6,497    $ 4,772    $ 4,006
State taxes, net of Federal benefit                   (94)      (233)        97
Nontaxable interest income                            (83)      (289)      (542)
Change in valuation allowance                         (35)        81        150
Effect of foreign operations                          180       (210)      (498)
Non-deductible stock-based compensation               (25)       180        360
Export tax benefits                                    --         --         26
Research credits                                     (258)      (854)      (124)
Domestic production tax benefit                      (470)      (325)      (211)
Change in uncertain tax positions                    (891)       732         --
Other, net                                             29        (80)      (282)
                                                  -------    -------    -------
                                                  $ 4,850    $ 3,774    $ 2,982
                                                  =======    =======    =======

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

(amounts in thousands)                                         2010       2009
                                                             -------    -------
Deferred tax assets:
     Inventories                                             $ 1,575    $ 1,103
     Deferred compensation                                       394        297
     Retirement benefits                                       1,515      1,360
     Postretirement benefits                                     918        876
     Stock-based compensation                                  3,684      2,854
     Nondeductible reserves                                      990        779
     Unrealized losses on securities available-for-sale          140        140
     Federal and state tax attribute carryforwards               286        472
     State net operating loss carryforwards                      227        177
                                                             -------    -------
       Gross deferred tax assets                               9,729      8,058
     Valuation deferred tax assets                              (505)      (540)
                                                             -------    -------
       Net deferred tax assets                                 9,224      7,518
                                                             -------    -------
Deferred tax liabilities:
     Plant and equipment, principally due to differences
       In depreciation                                        (3,343)    (3,641)
     Intangible assets including goodwill                     (4,626)    (4,365)
     Deferred revenue                                             --       (218)
                                                             -------    -------
       Gross deferred tax liabilities                         (7,969)    (8,224)
                                                             -------    -------
       Net deferred tax assets (liabilities)                 $ 1,255    $  (706)
                                                             =======    =======
(amounts in thousands)                                         2010       2009
                                                             -------    -------
Presented as:
Current deferred tax asset                                   $ 1,955    $ 1,547
Long-term deferred tax asset                                      26         27
Current  deferred tax liability                                   --       (177)
Long-term deferred tax liability                                (726)    (2,103)
                                                             -------    -------
     Net deferred tax assets (liabilities)                   $ 1,255    $  (706)
                                                             =======    =======

In assessing the realizable value of the deferred tax assets, the Company
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. The Company
considers the


                                       62
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based on the level of
historical taxable income and projections for future taxable income, the Company
believes it is more likely than not that it will realize the benefits of the
deferred tax assets, net of the existing valuation allowance.

At June 30, 2010 and 2009, the Company has unrealized losses on securities
available-for-sale of $0.4 million and $0.4 million, respectively. If realized,
these losses would be characterized as capital losses, which can only be used to
offset capital gains, resulting in capital loss carryforwards which would begin
to expire in five years. As a result of the limitations at June 30, 2010 and
June 30, 2009, the Company has a valuation allowance with respect to the
unrealized losses of $0.1 million for each year, respectively.

At June 30, 2010 and 2009, the Company has $4.0 million and $3.1 million of
state net operating loss carryforwards, respectively, which begin to expire in
2015. The Company does not believe it is more likely than not that it will
realize the deferred tax benefits of the state net operating losses and at June
30, 2010 has a valuation allowance of $0.3 million, an increase of $0.1 million
from June 30, 2009. At June 30, 2010, the Company has state tax credit
carryforwards of $0.2 million, which expire from 2011 through 2025. $0.2 million
of the state tax credits may only be realized after utilization of the net
operating loss carryforwards. The Company does not believe it is more likely
than not that it will realize the deferred tax benefits of the state tax credits
before their expiration. At June 30, 2010, the Company had a valuation allowance
with respect to the state tax credits of $0.1 million.

The Company's subsidiary in China is eligible for a tax holiday providing
reduced tax rates for the first five tax years after it generates taxable income
in excess of its existing net operating loss carryforwards. The tax benefit
varies over the remaining years of the holiday. Fiscal year ended June 30, 2010,
was the fifth and final year of its tax holiday, which ended on December 31,
2009. The effect of the tax holiday for the year ended June 30, 2010 is
approximately $0.2 million, or $0.01, per diluted share. United States income
taxes have not been provided on undistributed earnings of the China subsidiary
because such earnings are considered to be permanently reinvested and it is not
practicable to estimate the amount of tax that may be payable upon distribution.

In fiscal year 2008 the Company adopted the accounting standards relating to
uncertain tax positions. The Company did not record a cumulative effect
adjustment to retained earnings as a result of this adoption.

A reconciliation of beginning and ending unrecognized tax benefits is as
follows:

(amounts in thousands)
Balance at June 30, 2009                                                 $1,660
Lapse of statute of limitations                                            (545)
Audit settlements  ($0.2 million in cash payments)                         (449)
Increases related to prior years' tax positions                              --
Decreases related to prior years' tax positions                             (80)
Increases related to current years' tax positions                            53
Decreases related to current years' tax positions                            --
                                                                         ------
Balance at June 30, 2010                                                 $  639
                                                                         ======

As of June 30, 2010 and June 30, 2009, the Company had $0.6 million and $1.7
million, respectively, of unrecognized tax benefits that would affect the
Company's effective tax rate if recognized.

In accordance with the Company's accounting policy, the Company recognizes
accrued interest and penalties related to unrecognized tax benefits as a
component of income tax expense. This policy did not change as a result of the
accounting standards related to uncertain tax positions. For the year ended June
30, 2010 the Company recognized a decrease of $69,000 in accrued interest and
penalties, which was recognized as a reduction in tax expense. As of June 30,
2010 and June 30, 2009, the Company had $28,000 and $0.1 million, net of tax
benefit respectively, included in the liability for uncertain tax positions for
the possible payment of interest and penalties.

The Company has settled a Federal income tax audit for fiscal years 2007 and
2008 and a New York State aduit for fiscal years 2002 through 2006 during the
third quarter of the year ended June 30, 2010. The company remains subject to
income tax examinations for its U.S. federal taxes for fiscal years 2009 and
2010, and for foreign and state and local taxes for the fiscal years 2007
through 2010. It is reasonably possible that the liability associated with the
Company's unrecognized tax benefits will increase or decrease within the


                                       63
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

next twelve months as a result of possible examinations or the expiration of the
statutes of limitations. At this time, an estimate of the range of reasonably
possible outcomes cannot be made. Of the $0.6 million of unrecognized tax
benefit liabilities, interest, and penalties at June 30, 2010, the Company has
classified all as non-current liabilities on the Company's consolidated balance
sheet.

During fiscal year 2008, income from discontinued operations of $0.8 million was
recognized due to the reduction of an unrecognized tax benefit resulting from
the lapse of the applicable statute of limitations.

(16) Segment and Related Information

(a) Segments

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

The Wireless Group designs, manufactures, and markets commercial products used
mainly by the wireless communications market. The Space & Defense Group of the
business designs, manufactures, and markets specialized products for the radar
and communications markets. The Company's Space & Defense Group aggregates
certain operating segments into one reportable segment, as the operating
segments depict similar products, customers, industries and experience similar
margins on products.

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

<TABLE>
<CAPTION>
                                                 Space &
(amounts in thousands)              Wireless     Defense       Unallocated     Consolidated
                                   ---------    ---------      -----------     ------------
<S>                                <C>          <C>            <C>              <C>
Net sales:
    2010                            $55,556      $113,233       $      --        $168,789
    2009                             68,622        98,283              --         166,905
    2008                             78,741        52,575              --         131,316
Operating income (4)
    2010                              5,102        14,456           (774)          18,784
    2009                              6,649         8,202           (824)          14,027
    2008                              3,639         6,155           (592)           9,202
Goodwill and intangible assets:
    June 30, 2010                    30,716        21,872              --          52,588
    June 30, 2009                    30,716        23,263              --          53,979
Identifiable assets (1)
    June 30, 2010                    16,337        69,686         102,737         188,760
    June 30, 2009                    18,099        61,135         103,842         183,076
Depreciation (2)
    2010                              4,415         4,301              --           8,716
    2009                              4,933         3,467              --           8,400
    2008                              3,744         3,020              --           6,764
Intangibles amortization (3)
    2010                                 --         1,191              --           1,191
    2009                                 --         1,076              --           1,076
    2008                                 38            --              --              38
</TABLE>

(1)   Segment assets primarily include receivables, inventories and assets
      related to the Company's subsidiaries MSK and Unicircuit 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


                                       64
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

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

(2)   Depreciation expense related to acquisition--specific property, plant, and
      equipment is included in the segment classification of the acquired
      business. Depreciation expense related to non-business combination assets
      is allocated departmentally based on an estimate of capital equipment
      employed by each department. Depreciation expense is then further
      allocated within the department as it relates to the specific business
      segment impacted by the consumption of the capital resources utilized. Due
      to the similarity of the property, plant, and equipment utilized, the
      Company does not specifically identify these assets by individual business
      segment for internal reporting purposes.

(3)   Amortization of intangible assets arising from business combinations is
      allocated to the segments based on the segment classification of the
      acquired or applicable operation.

(4)   Unallocated amounts relates to the lease expense incurred on the London
      lease

(b) Geographic Information

Net sales by geographic region are as follows:

(amounts in      United       Asia                                  Consolidated
thousands)       States     Pacific     Europe   Americas   Other    Net sales
2010            $124,610    $30,975    $ 8,912    $  878    $3,414    $168,789
2009             104,152     37,430     15,650     2,627     7,046     166,905
2008              66,420     37,801     19,676     1,887     5,532     131,316

(c) Customers

In 2010, sales to two customers (Lockheed Martin Corp. and Raytheon Company)
both exceeded 10% of consolidated net sales, totaling approximately $46.5
million (Space & Defense Group). In 2009, sales to Lockheed Martin Corp.
exceeded 10% of consolidated net sales, totaling $24.7 million (Space & Defense
Group). In 2008, sales to two customers (Nokia Corp. and Lockheed Martin Corp)
both exceeded 10% of consolidated net sales, totaling approximately $39.4
million ($22.4 million related to the Wireless Group and $17.0 million related
to the Space & Defense Group).

(17) Commitments

The Company is obligated under contractual obligations and commitments to make
future payments such as lease agreements and contingent commitments. The
Company's obligations and commitments are as follows:

(amounts in thousands)                            Operating           Other
Year ending June 30:                                Leases         Long-Term(1)
2011                                                $  695             $ 65
2012                                                   767               65
2013                                                   694               65
2014                                                   563               65
2015                                                   301               65
Thereafter                                             225              100
                                                    ------             ----
                                                    $3,245             $425
                                                    ======             ====

      (1) - Deferred Compensation

Net rent expense for the years ended June 30, 2010, 2009, and 2008 was $1.2
million, $1.2 million, and $1.6 million, respectively. Rent expense for fiscal
2008 was offset by sublease income of $0.2 million.

The minimum lease payments for the Company's operating leases are recognized on
a straight-line basis over the minimum lease term. The Company's China operation
building lease has a step rent provision. Rent expense is recognized on a
straight line basis over the lease term.


                                       65
<PAGE>

                                  ANAREN, INC.
                   Notes to Consolidated Financial Statements
                          June 30, 2010, 2009, and 2008

(18) 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 related 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 direct contractors of the United States Government accounted for
approximately 59%, 50%, and 35% of consolidated net sales in fiscal 2010, 2009,
and 2008, respectively. While management believes there is a high probability of
continuation of the Company's current defense-related programs, it is attempting
to reduce its dependence on sales to direct contractors of the United States
Government through development of its commercial electronics business.

The Company maintains and operates a facility in Suzhou, China. During fiscal
year 2010, net external sales totaled $2.4 million. Included in the company's
total assets, as of June 30, 2010, includes $1.3 million of inventory held for
resale, as well as $3.3 million of fixed assets (net of related accumulated
depreciation). As of June 30, 2010, there is no reason to believe that any of
the Company's foreign assets or future operations will be impaired.

(19) Quarterly Financial Data (Unaudited)

The following table sets forth certain unaudited quarterly financial information
for the years ended June 30, 2010 and 2009:

<TABLE>
<CAPTION>
                                                           2010 quarter ended
                                          ------------------------------------------------
(in thousands, except per share amounts)  September 30    December 31  March 31**  June 30
<S>                                          <C>            <C>         <C>        <C>
Net sales                                    $40,337        $41,019     $42,181    $45,252
Gross profit                                  14,664         14,306      16,825     16,482
Net income                                     2,857          2,522       4,561      3,772
Income from continuing operations:
    Basic earnings per share                   $0.20          $0.18       $0.33      $0.27
    Diluted earnings per share                  0.19           0.17        0.32       0.26

<CAPTION>
                                                           2009 quarter ended
                                           -----------------------------------------------
(in thousands, except per share amounts)   September 30*  December 31*  March 31   June 30
<S>                                          <C>            <C>         <C>        <C>
Net sales                                    $38,124        $41,443     $43,507    $43,831
Gross profit                                  11,523         12,299      15,084     15,710
Net income                                     1,342          1,584       3,476      3,457
Income from continuing operations:
    Basic earnings per share                   $0.09          $0.11       $0.25      $0.25
    Diluted earnings per share                  0.09           0.11        0.25       0.24
</TABLE>

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

* There was $1.1 million of inventory step-up expense related to the purchase of
MSK and Unicircuit in the first and second quarter ending September 30, 2008 and
December 31, 2008, respectively.

** The inclusion of the effects of the settlement of the IRS examination of the
Company's fiscal 2007 and 2008 returns, as well as, adjustments to reserves for
uncertain tax positions related to the results of the examination amounting to a
reduction in tax expense of approximately $1.0 million, or $0.07 per diluted
share in the third quarter.


                                       66
<PAGE>

                                INDEX TO EXHIBITS

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

   2.1            Agreement and Plan of Merger, dated August 18, 2008, among the
                  Company, Anaren Acquisition, Inc., Unicircuit and Owen Agency,
                  LLC, as the Stockholders' Agent (1)

   3.1            Certificate of Incorporation, as amended (2)

   3.2            Amended and Restated By-Laws (3)

   4.1            Specimen Certificate of Common Stock (4)

   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 (5)

   10.1           Employment Agreement, dated as of July 1, 2006, between the
                  Company and Lawrence A. Sala (6)*

   10.2           Pension Plan and Trust (7)*

   10.3           Anaren Microwave, Inc. Incentive Stock Option Plan, (as
                  amended) (8)*

   10.4           Anaren Microwave, Inc. 1989 Nonstatutory Stock Option Plan,
                  (as amended) (9)*

   10.5           Anaren Microwave, Inc. Incentive Stock Option Plan for Key
                  Employees (10)*

   10.6           Anaren Microwave, Inc. Stock Option Plan (11)*

   10.7           Form of Change of Control Agreements, each dated June 22,
                  2007, with Joseph Porcello, Mark Burdick, Timothy Ross, Amy
                  Tewksbury and Gert Thygesen (12)*

   10.8           Employment Agreement, dated as of February 14, 2004, between
                  the Company and Carl W. Gerst, Jr. (13)*

   10.9           Anaren, Inc. Comprehensive Long-Term Incentive Plan (14)*

   10.10          Amendment #1 to Anaren, Inc. 2004 Comprehensive Long-Term
                  Incentive Plan, (15) *

   10.11          Addendum to the Employment Agreement with Carl W. Gerst, Jr.,
                  dated as of May 16, 2007, between the Company and Carl W.
                  Gerst, Jr. (16)*

   10.12          Amendment #2 to the Employment Agreement with Carl W. Gerst,
                  Jr., dated as of June 16, 2008, between the Company and Carl
                  W. Gerst, Jr. (17)*

   10.13          Loan Agreement, dated as of July 31, 2008, between the Company
                  and KeyBank National Association (18)


   10.14          Promissory Note Revolving Credit LIBOR Rate, dated July 31,
                  2008, issued by the Company to KeyBank National Association
                  (18)

   10.15          364 Day LIBOR Grid Note Loan Agreement, dated as of May 1,
                  2008, issued by the Company to Manufacturers and Traders Trust
                  Company (19)

   10.16          Stock Purchase Agreement, dated July 30, 2008, among the
                  Company, MSK and the individual shareholders and seller's
                  representative party thereto (20)

   10.17          Amendment to Employment Agreement, dated December 30, 2008, by
                  and between Lawrence A. Sala and the Company (21)*

   10.18          Amendment #3 to Carl W. Gerst, Jr. Employment Agreement, dated
                  December 30, 2008, by and between Carl W. Gerst, Jr. and the
                  Company (22)*


                                       67
<PAGE>

   10.19          Amendment #4 to Employment Agreement, dated May 13, 2009, by
                  and between Carl W. Gerst, Jr. and the Company (23) *See
                  Attachments for inserts.

   10.20          Anaren, Inc. 2004 Comprehensive Long-Term Incentive Plan, as
                  Amended (25)*

   10.21          Amendment #5 to the Employment Agreement, dated June 8, 2010,
                  by and between Carl W. Gerst, Jr. and the Company (26)*

   16.1           Letter from KPMG, LLP, dated December 10, 2008 (24)

   21             Subsidiaries of the Company

   23.1           Consent of KPMG LLP, Independent Registered Public Accounting
                  Firm

   23.2           Consent of Deloitte & Touche LLP, Independent Registered
                  Public Accounting Firm

   31.1           Certifications of Chief Executive Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002**

   31.2           Certifications of Chief Financial Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002**

   32.1           Certifications of Chief Executive Officer Pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002

   32.2           Certifications of Chief Financial Officer Pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002

*     Indicates Management contract or compensatory plan or arrangement

**    Furnished herewith.

(1)   Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on August 20, 2008.

(2)   Restated Certificate of Incorporation of the Company, filed on September
      17, 1968, 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 by the New York Department of State,
      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 by the New York Department of State, 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 by the New York
      Department of State, 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 by the New York
      Department of State, 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 filed with the Securities and Exchange
      Commission on September 27, 1999; (F) Amendment, filed on February 8, 2000
      by the New York Department of State, 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; (G) Amendment, filed on November 22, 2000 by
      the New York Department of State, is incorporated by reference to Exhibit
      3.1 to the Company's Quarterly Report on Form 10-Q (Commission File No.
      0-6620) filed with the Securities and Exchange commission on February 12,
      2001; and (H) Amendment, filed on December 20, 2002 by the New York
      Department of State, is incorporated by reference to Exhibit 3 to the
      Company's Quarterly Report on Form 10-Q (Commission File No. 0-6620) filed
      with the Securities and Exchange Commission on January 29, 2003.

(3)   Incorporated herein by reference to Exhibit 3.2 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on December 20, 2007.

(4)   Incorporated herein by reference to Exhibit 4.3 to the Company's
      Registration Statement on Form S-3 (Registration No. 333-31460) filed with
      the


                                       68
<PAGE>

      Securities and Exchange Commission on March 2, 2000.

(5)   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.

(6)   Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K, (Commission File No. 0-6620), filed with the
      Securities and Exchange Commission on July 25, 2006.

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

(8)   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.

(9)   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.

(10)  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.

(11)  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.

(12)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on June 27, 2007.

(13)  Incorporated herein by reference to Exhibit 10.1 to the Company's
      Quarterly Report on Form 10-Q filed with the Securities and Exchange
      Commission on May 3, 2004.

(14)  Incorporated herein by reference to Appendix A to the Company's definitive
      proxy statement for its 2004 annual meeting of the shareholders
      (Commission File No. 0-6620), filed with the Securities and Exchange
      Commission on September 17, 2004.

(15)  Incorporated herein by reference to Appendix A to the Company's definitive
      proxy statement for its 2006 annual meeting of the shareholders
      (Commission File No. 0-6620), filed with the Securities and Exchange
      Commission on September 15, 2006.

(16)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No.0-6620) filed with the Securities
      and Exchange Commission on July 25, 2007.


(17)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No.0-6620) filed with the Securities
      and Exchange Commission on June 20, 2008.

(18)  Incorporated herein by reference to Exhibit 10.2 and 10.3 to the Company's
      Current Report on Form 8-K (Commission File No. 0-6620) filed with the
      Securities and Exchange Commission on August 1, 2008.

(19)  Incorporated herein by reference to Exhibit 99.1 to the Company's
      Quarterly Report on Form 10-Q (Commission File No.0-6620) filed with the
      Securities and Exchange Commission on May 12, 2008.


                                       69
<PAGE>

(20)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on  August 1, 2008.

(21)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on January 5, 2009.

(22)  Incorporated herein by reference to Exhibit 10.2 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on January 5, 2009.

(23)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on May 14, 2009.

(24)  Incorporated herein by reference to Exhibit 16.1 to the Company's Current
      Report on Form 8-K (Commission File No. 0-6620) filed with the Securities
      and Exchange Commission on December 10, 2008.

(25)  Incorporated herein by reference to Exhibit 10.1 to the Company's
      Quarterly Report on Form 10-Q (Commission File No. 0-06620) filed with the
      Securities and Exchange Commission on January 29, 2010.

(26)  Incorporated herein by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K (Commission file No. 0-06620) filed with the Securities
      and Exchange Commission on June 8, 2010.